Product Market Competition, Capital Structure And Corporate Performance

Since 1980 s, the industrial organization theory and the theory of capital structure towards integration, the research of the relationships between product market competition and capital structure became the academic focus. Under the condition of market economy, the capital structure is the internal mechanism of corporate governance and the product market competition is the external mechanism of corporate governance, both of them will affect the performance of the company. At present, our country is in the period of economic transition, the market economy system has been established, the openness is increasing quickly, and the capital market is becoming more and more mature. Researching the influence of China’s product market competition on the capital structure, the product market competition, capital structure and their interactions on the performance of the company can contribute to discover the existence of our country the problem of listing Corporation. This research can improve China’s economic system reform, strengthen corporate governance.This paper first reviews the related theory and previous literature. Then, analysis the impact of product market competition on the capital structure, and the impact of product market competition, capital structure and their interactions on the performance of the company. And then, this paper establishes a panel data model base on the data of Chinese manufacturing industry listing Corporation during 2009-2013,in order to do the empirical analysis. After a brief analysis of the relationship between industry concentration degree and the capital structure and corporate performance. This paper focus on the analysis of the influence of product market competition on the capital structure, product market competition, capital structure and their interaction impacts on corporate performance. Finally, according to the conclusion of the study, puts forward the corresponding countermeasure and suggestion.The research results indicate that: ①There is a no significant positive correlation between the degree of industry concentration and industry listing Corporation average capital structure. The product market competition listing corporation faced has a positive impact on the capital structure, but this effect is not significant. In monopoly group, the product market competition listing corporation faced has a stronger and more significant positive influence on the capital structure. ②There is a no significant negative correlation between the degree of industry concentration and the company performance. The product market competition single listing corporation faced has a negative impact on the corporate performance, and in monopoly industries, this influence is bigger and more significant. The capital structure has a negative influence on the performance of listing Corporation, and in monopoly industries, this negative effect appears to be stronger. Interaction between product market competition and capital structure also has a negative impact on the performance of listing Corporation, and in the monopoly industries, the negative impact is more obvious. Based on the above research conclusion, this paper put forward the following countermeasures: On the macro level, our government should accelerate the economic system reform, improve the market mechanism and the capital market of our country, expanding the listing Corporation debt financing channel. On the micro level, manufacturing listing Corporation should enhance the competitiveness of products, and to make a financing decision based on product market competition.