The Empirical Study On Correlation Between Capital Structure And Performance Of China Listed Company

The prime object for corporation, as an independent entity, is to maximize its own value. So, how can we achieve the maximization of value? This question involves the policy formulation of financial affairs as a modern corporation. The even more important section toward financial policy formulation is the capital structure, which become more concern than any other policies among academic field. Recently, the research on the capital structure of China listed Company has become a top topic. Many theories have been put forward from different angle by different economists and wide research has been conducted, however, different opinions arise. There is no widely-accepted conclusion on the relation between capital structure and operational performance.Meanwhile, under the background of globalization and the deepen of Chinese corporations, there has been tremendous change on the property institution, operational management and financing behaviors, which leads to the new change of corporation's capital structure. Recently, the question about the rationality of capital structure of Chinese corporations is an important topic concerning the China economic development and further research should be done.Based on the classical foreign theories about capital structure, such as trade-off theory, agent theory and with the help of the panel data including all listed companies in recent 10years, this paper hold the opinion that there exist a best capital structure range which could maximize the Operating performance. The empirical results support the assumption that there exist an optimal capital structure range and have the positive correlation between the performance of corporation and size,ownership percentage held by manager and the largest shareholder, the negative correlation between the performance of corporation and ownership percentage held by circulation shareholder and nation. Then we did the follow-up empirical study for the China listed Company in different industries. The suggestions are also provided in order to optimize the capital structure of Chinese companies.