An Empirical Study On The Interaction Between Capital Structure And Corporate Performance

Capital structure theory is an important part of Western financial theory.It has always been the focus of the theoretical research,and it has great practical significance in practice.Capital structure decision-making is closely related to corporate strategy,coporate value and corporate governance structure,so it is also a particular concern of to real-world company executives and investors.This paper takes the financial statements data of 786 manufacturing listed companies in Shanghai and Shenzhen from 2007 to 2017 as the samples.Taking the assetliability ratio and return on net assets as the measure of capital structure and corporate performance respectively.The paper empirically studies the interactive relationship between capital structure and corporate performance of manufacturing enterprises through the establishment of VAR model.Selecting the data of manufacturing listed companies as a sample is of great theoretical and practical significance for China’s manufacturing listed companies to rationally plan capital structure,improve company performance and improve the company’s core competitiveness.Paper using VAR model,rather than the linear regression model used in previous studies is the cause of vector autoregressive model focuses on two-way influence relation between capital structure and corporate performance of existence and the influence of the specific direction,to solve the linear regression model of autocorrelation.Relevant and unable to analyze the problem of the interaction of the two VAR iables.Considering the characteristics of VAR model and avoiding the problem that the single sample is not representative and the conclusion difference between large samples is difficult to explain,the paper divides the sample company into three groups by clustering analysis and carries out pulse response analysis respectively.The results show that the capital structure has a weak positive response to corporate performance,while corporate performance has a negative response to corporate capital structure.In terms of corporate differences,the response has declined from large to small to medium-sized firms.The results show that there are still has many problems in capital market perfection and corporate governance in China.These conclusions provide a realistic basis for the formulation of management supervision policy and the financing of Chinese companies.