Empirical Research On Relationship Between Capital Structure And Profitability Of Listed Mining Companies

Profitability is the basis of a business’ s survival and development, while there are so many factors that affect the profitability for many reasons, one of which is the capital structure. Correlation of the capital structure and profitability has been a hot research in China and abroad. At the same time, mining, as the basic industry of the national economy, has an important impact on Chinese economic development. At present, there are also irrational structure and low profitability problems in listed mining companies.Therefore, how to optimize the capital structure of listed mining companies effectively so as to improve the profitability, has important significance both in theory and in reality.On the basis of reviewing the theory of capital structure,the article selects the listed mining companies as research object, introduces the definition of capital structure, the development of capital structure theory and profitability, and analyzes the evaluation of capital structure and profitability. Besides, the article analyzes the situation of listed mining companies at present, the capital structure and profitability by using financial indicators and gets the correlation results between the capital structure and profitability.In the empirical study, the article selects 99 listed mining companies as samples and chooses the five-year’s financial data from 2009 to 2013, so as to explore the correlation between the capital structure and profitability. Studies selected asset-liability ratio as independent variables, the total return on assets and return on equity as the dependent variable in linear regression and quadratic regression. In linear regression, adding growth, company size as control variable, plus heteroscedasticity examinations to test samples, ultimately obtains a valid regression model. The empirical results show that, listed mining company’s total return on assets and asset-liability ratio was significantly negatively correlated, and is a linear, non-quadratic curve; and asset-liability ratio and ROE was no significant correlation, either linear or two time curve.Based on these studies, this paper proposes the following rules for listed mining companies,from itself and the macroeconomic policy areas, so as to optimize capital structure of listed mining companies.(1) making changes in enterprise management mechanisms, reducing asset-liability ratio;(2) expanding the number of corporate assets, improving the quality of assets;(3) improving the corporate governance structure to maintain a reasonable ownership structure;(4) improving the capital market, developing the bond market;(5) developing venture capital firms, diversifying financing channels corporate for firms.