Influencing Factors Of China's Capital Structure Listed Pharmaceutical Companies

Choice of capital structure is the core issue of enterprises' financial decision-making. Beginning with Modigliani and Miller's famous theory of MM proposed in the 1950s, research on this issue has been going on for nearly 60 years, and has achieved a series of research results on capital structure. The many research studies on the capital structure indicate that the capital structure of different industries has notable differences. But research on specific formation of the sector capital structure and the analysis of influencing factors is lacking. The rapidly developing pharmaceutical industry in China has its own significant industry characteristics compared to other sectors. In view of this, this paper focuses on companies in the pharmaceutical industry to study the factors affecting capital structure.This paper listed companies on China's pharmaceutical capital structure in the presence of low debt, liabilities. The problem of irrational structure was system introduced. Following, the theory of Capital structure evolution is outlined. Next, related research achievements at home and abroad were recalled. Finally, some factors which impact China's pharmaceutical listing capital structure are summarized. On this basis, this paper takes a look at the operating characteristics and performance of two companies at the micro level to study the theme of this paper, and to build on the "characteristics of the company, the company operating performance - capital structure" on the three major elements of the theoretical analysis framework. From the company size, profitability, growth, tangible assets, viability, liquidity, tax effects, and other aspects of the unique products, I selected 17 indicators as explanatory variables to study the impact of China's pharmaceutical company's capital structure. Finally, I use factor analysis and multiple linear regression to analyze the impact China's pharmaceutical listing of the company's capital structure.After empirical analysis, I integrated 17 explanatory variables into five factors. Empirical analysis found that the highest level factor in China's pharmaceutical capital structure of listed companies is profitability. Others were: growth and operating capacity, accounts receivable turnover ratio and non-debt tax shield, scale, tangible assets, mobility and products. The relevance of these five factors with the capital structure were negatively correlated, positively correlated, negatively correlated, positively correlated, and positively correlated, respectively.Combining empirical research findings, this paper puts forward capital structure optimization strategies and policy recommendations for China's pharmaceutical market. Finally, this paper introduces shortage and the need of further research.