Research On Determinants And Optimization Of Capital Structure In The Chinese Listed Auto Companies

Since the MM theory was put forward by Modigliani and Miller in 1958,the capital structure has been the important research topics of the theoretical and academia circle. On the basis of MM theory,scholars extend rich greatly the theory of capital structure,through extensive and in-depth study. The empirical studies of these scholars are divided into two categories:first,focus on validation of some theories,such as agency cost theory,the optimal sequence financing theory,etc;second,focus on the influencing factors of enterprise capital structure,but the scholars,research conclusions exist differences.Auto industry as the pillar industry of national economy,the rationality of capital structure has a significant impact on corporate performance,so it will eventually have a major impact on the country’s economic development. With the steady progress of Income Doubling Programmed,the market demand of car also will continue to rise. It is a rare development opportunities for the automotive industry.Auto industry belongs to the capital-intensive industries,the development of the automobile industry can’t depart from the support of much capital, and the asset-liability ratio in auto industry is generally on the high side. Therefore,it is high time to study what factors and how influence the capital structure and optimize the capital structure to improve the whole performance of auto industry and reduce the financial risk.Based on the listed automobile industry company in China as the research sample,firstly,the status quo of its capital structure and corporate performance is described. Secondly,correlation analysis and regression analysis between capital structure and these factors is made. It is concluded that there is negative correlation between asset-liability ratio and short-term debt paying ability,non-debt tax shields,and profitability;it is positive correlation between asset-liability ratio and Asset collateral value,the enterprise scale.Moreover,we find it is no significantly positive correlation between asset-liability and the company’s growth. In addition,in order to provide a reference for all kinds of automotive industry companies,especially large number of non-listed companies,the automotive industry companies are classified into the large,small and medium-sized company in accordance with size. Then,the appropriate optimal capital structure is selected for each type of company. Finally,the recommendations are put forward for the optimization of the capital structure and the direction of further research.