Based On China A-shares Manufacturing-Empirical Analysis Of Capital Structure On Shareholders’ Equity Risk

Since economic globalization,China’s manufacturing market has been rapid development.Manufacturing is a need for technical accumulation time and a lot of talent pool industry.Meanwhile,in urgent need of renewal and updating of equipment,production process of a shortage of funds has become a large manufacturing problems to be solved.In order to keep up with the pace of development of the industry,and the chain of company funds to resolve a range of issues,many manufacturing companies began to seek additional debt financing channels.Expand the scale of debt is often accompanied by a change in the company’s capital structure.The long-standing relationship between capital structure and value of the company is a topic widely discussed by academics.Miller,Modigliani If two well-known researchers found that corporate income tax into account,the company’s financial leverage will have a direct effect on the value of the company.Shareholders will continue to increase because of financial leverage and take higher risk.When manufacturing companies operators who use debt financing,might blindly change the company’s capital structure by increasing the company’s debt,increase financial leverage other ways to improve the company’s performance.Increased debt,increase financial leverage means more risk toshareholders,since the company expanded the scale of debt,increased interest expenses and lower earnings,which will lead to the possibility of insolvency or bankruptcy of the company increases.Therefore,the claim to the remaining shareholders of the company will increase the size of the debt and more to enhance shareholders’ meeting to make up for it the risk of a higher rate of return by request.However,in the company’s financial management activities,often ignores the impact of changes in capital structure risk shareholders’ equity,which is likely to lead to future value of the investment projects the company is overvalued,resulting in blind investment,financial risk rise,decline in value of the company company capital structure management is not rational,and even the company into a series of financial crisis consequences.Companies not only have a highly indebted company itself have a negative impact,and would adversely affect the stability of the economy,because of high corporate debt ratio will drag on economic growth,increase the probability of a recession occurring.In this paper to the domestic and foreign correlative research on the change of the capital structure impact on the equity risk of literature evaluation corresponding research gaps,introduces the famous MM theory,the capital asset pricing model(CAPM)and Hamada(Robert Hamada,1969)model,on the basis of the theory established the empirical model for the purpose of this study.Through the empiricalmodel can be analyzed when the company’s capital structure changes lead to financial risks rise,the shareholders shall obtain the reward is much,from historical financial data comparison and analysis of China’s capital market is timely given the corresponding shareholder rewards.The study of this problem can be a good response to the rational investment of Chinese shareholders,and the rational investment of shareholders,the company’s rational financing,re investment and evaluation of the company’s value to provide help.