The Relationship Between Capital Structure And Business Performance In Publicly-traded Companies In Energy Conservation And Environmental Protection Industry

The relationship between capital structure and business performance of listed companies is always a focus of the theory and empirical studies at home and abroad. According to former studies, research methods and index selection have not formed a consistent view. The conclusion of these researches are also varies. Therefore, the study of the relationship between capital structure and corporate performance is still necessary.At present energy conservation and environmental protection industry has become one of seven major strategic emerging industries in China. Energy conservation and environmental protection industry’s development is related to economic sustainable and long-term development of human beings. Energy conservation and environmental protection industry itself has the special properties and the stage of development determines its financing structure, corporate governance and financial decisions having some certain particularity. Researching on energy conservation and environmental protection enterprise’s capital structure and business performance can effectively improve the target enterprise’s performance and put forward policy suggestions according to the specific condition of the industry.Based on the analysis of domestic and foreign scholars on the basis of research results,106 energy conservation and environmental protection listed companies are selected as research subject between 2012 and 2014. The dissertation is about the relationship between capital structure and business performance. First and foremost, this paper explores capital structure, enterprise performance evaluation and the influence of the relationship between capital structure and corporate performance on the theory level, reviews of capital structure and the performance evaluation theory and the relationship between these through reading literature. Secondly it uses factor analysis method to construct the performance evaluation model, and to evaluate the business performance of 106 firms. Then it selects seven indexes which reflecting the capital structure, and describes and analysis the present situation of the capital structure. Finally, it uses the panel data model between capital structure and corporate performance by single equation of regression, and acquires the results of the empirical analysis, then explains the empirical results in reasonable aspect.This paper selects the listed companies, whose main business is energy conservation and environmental protection, listed in Shanghai and Shenzhen’s A share market, as the research object. This paper, an empirical study of the relationship between capital structure and corporate performance, based on the energy conservation and environmental protection industry, hopes to verify the general conclusions about the capital structure and business performance. At the same time, it hopes to reveal the particularity of the energy conservation and environmental industry in the conditions of China. And it also wants to explore how to improve business performance from the perspective of optimizing capital structure and tries to put forward effective suggestions about developing the energy conservation and environmental protection industry.According to the empirical study, this paper gets the following conclusion. Firstly, the listed energy conservation and environmental protection companies get low comprehensive score of the business performance. Secondly, this type of companies has the low proportion of debt financing and higher equity concentration. Thirdly, the actual control of people holding ratio positively correlated with business performance. The state-owned holding helps to improve business performance. Fourthly, the current-debt ratio and asset-liability ratio are negatively correlated with business performance. The whole amount of liabilities is conducive to business performance improvement. Fifthly, companies of non-manufacturing industry have a better performance than companies of manufacturing industry. At present the scale of assets are negatively related with business performance.According to the result of empirical analysis and result analysis, this paper puts forward several suggestions for optimization of energy conservation and environmental protection enterprises:(1) Increase the amount of debt appropriately, and maintain the appropriate asset-liability ratio. (2) Control the scale of assets and keep a steady increasing rate of asset. (3) Improve ownership concentration, and at the same time establish and improve the guarantee mechanism of shareholders’ interests. (4) Make full use of the national preferential policies which give privilege to the development enterprises. (5) Promote the development of the non-manufacturing industry; promote transformation and upgrading of manufacturing industry.