The Relationship Between Capital Structure And Corporate Performance

Our private economy has been booming and become an indispensablecomponent of the Socialist market economy system since reform and opening up tothe world. China's private listed company is the advanced part of nongovernmentaleconomy, and it has property right structure and market oriented behavior. So theinvestigation of the relationship between capital structure and company performancewhich bases on the corporations may eliminate effectively the "market noise". Theresult of the investigation can reflect the problem of our country's capital marketsystem, and obstacles against the private economy's progress.The thesis selects Chinese A-share private companies which are listed before2002 as sample companies, and collects the related data of the companies. The authoruses former research flame for reference to establish corporate market performancelinear model and financial performance linear model, and makes use of the panel datato do empirical analysis. The thesis also tries to establish conic model to discuss theoptimal range of liability's ability.The result is that the corporate financial indicator, ROE (return on equity), has annegative correlation with the ratio of liability, while positive correlations with theratio of long-term liability and the increase rate of main business revenue. Thecorporate market performance indicator, Tobin'Q has obscure correlations with theindependent variables. We can't find out the optimal range of liability's abilitythrough the conic model in which the corporate market performance indicator,Tobin'Q, is the dependent variable.