Empirical Study On The Influence Of The Capital Structure On Business Performance Of Zhejiang’s Listed Companies

Over the past30years since reform and openness, Zhejiang’s economy has been developingrapidly and the number of domestic listed company of the whole province is in the second placein China now. However over the past few years, some indexes of aggregate performance like netprofit growth rate and operating income growth rate are lower than the national level. Throughdata statistics, it found that the liability ratio and equity restriction ratio are in a relatively lowlevel in Zhejiang, thus its economy structure possesses specificity. The paper tried to find out thereasons and solution of this situation based on capital structure by analyzing the current state oflisted companies in Zhejiang. And it would help the listed companies in Zhejiang develop theirperformances and provide scientific basis for policy formulation and implementation.The paper firstly teased the achievement of the research on affluence of capital structure tobusiness performance. And then on the basic of thoroughly analysis of the current situation ofZhejiang province’s listed companies in total quantity、 industry distribution and arealdistribution and also the capital structure, the paper picked60domestic listed companies(nonefinancial enterprises) of Zhejiang as the study sample and analyzed the data between2004and2013. Through the regression analysis by the model of fixed variable intercept, the paper finallyfound the research conclusions that the liability ratio、first majority shareholder’s ratio and equityrestriction ratio could improve the performance of the Zhejiang listed companies, but the owningof the state-owned shares had a negative influence on the business performance.Thus the listed companies in Zhejiang should appropriately increase the liability level and theequity restriction ratio under a high level of first majority shareholder’s ratio to optimize theownership structure, and establish effective motivation and restriction mechanism. Meanwhile,Zhejiang province should put an emphasis on the development of debt market, provide solid legalbasis for it, and advance the policy of state stock reduction to perfect the governance structure oflisted companies in Zhejiang.