Empirical Analysis About The Relationship Between The Capital Structure And Company Performance Of Public SMEs

Many economists studied the relationship between capital structure and industrial performance from different angles, but so far there is no a uniform answer about the relationship between them. The aim of the study of their mutual interaction is to seek the right capital structure. The relationship of capital structure and industrial performance of public companies becomes a hot subject, which is great significance for the company administrate decision and the future trend plan.As the developing and perfecting of market economy and the growing of the stock market, exploring the rationality of enterprise capital structure has become the main details of academic circles. Meanwhile the correlative research of capital structure has the fundamental conditions from the operation mode and management mode of public companies.With currently the accessorial count of public firms in our country, the company’s operating situation is very important to the domestic economic progress, whose decisions also has attracted much attention. Therefore, studying the relativity between capital structure and corporate performance has a practical significance for the optimization of capital structure for the company, the improvement of governance structure and the guidance of business philosophy by the historical data of public companies.Considering more influence elements of capital structure and corporate performance, referencing to the results of related research papers, this paper selects the significant the control variables on capital structure and corporate performance by stepwise regression method.In addition, considering the interaction between capital structure and corporate performance, this paper builds the two equations on capital structure and corporate performance as being explained variable;At the same time considering the capital structure and corporate performance in the previous year information influencing the present year information and in order to removing the impact of the model of endogenous problems, this paper respectively introduces the lag of first order of corresponding explained variable in the two models respectively. When making the regression analysis on the model, considering the endogenous variable, this paper adopts the first order difference of generalized distance estimation method (DIFF-GMM).Finally, based on the granger causality analysis, the result reveals that existence interaction influence of public company capital structure and industrial performance of SMEs board.At the same time, Regression results of two models reveal that capital structure and corporate performance of SMEs boards of public enterprises exists Inverse correlation, meaning high debt ratio having reverse effects on corporate performance; Small and medium-sized board public company corporate performance Inverse relationship with capital structure, meaning the corporate performance is the better, the asset-liability ratio is often lower.