An Empirical Study On The Relationship Between Growth And Capital Structure In Chinese Listed Firms

After nearly four decades' reform and opening-up,China's economy keeps increasing and developing.In China,the finance environment and financing policies are really different from those in developed countries.Considering these backgrounds,researching the impact of growth to Chinese listed firms' capital structure has an important reality meaning.Though previous studies did try to investigate the influence of growth on the capital structure of firms,most of them treat growth as a control variable without further investigation.This paper bases on this premise and tries to fix this problem.Based on the fact that Chinese economy is developing quickly and the difference in debt market and stock market,this paper uses Generalized Method of Moments(GMM)with data from 2003 to 2015,and proposes a growth hypothesis of capital structure of Chinese firms,that is,the higher the firm's growth,the higher the financial leverage.The paper further investigates the impact of external financing constraints on the relationship of growth and leverage,and shows that the firm with stronger financing constraints has a stronger relation between growth and leverage.Finally,the robustness test is conducted in the high-tech industries with financial constraints and high growth.The conclusions of this paper have important implications for both the listed firms and the market regulators.