The Empirical Study On The Relationship Between The Financial Structure And The Performance Of The Large-sized Listed Companies In China

This paper mainly discusses the relationship between financial structure and Enterprise Performance of China's Large-sized Listed Companies from the year 2003 to 2006.With the correlation analysis of financial structure and Enterprise Performance, we will combine the results with modern financial theory and discuss the reason why financial structure and performance can be formed like this.The auther put forward four hypothesis based on the analysis of Theory and References.The first is that TDR has positive relation with Enterprise Performance ,debt finance has positive effect on the performance of the Listed Companies.The second is that there is a critical value in theory,within this value, just as the first hypothesis said,TDR has positive relation with Enterprise Performance,but there will be high venture if the rate of debt is greater than the critical value.In that condition, TDR has negative relation with Enterprise Performance.The third is that internal financing structure per share has positive relation with EVA per share, debt financing structure per share has negative relation with EVA per share, equity financing structure per share has also negative relation with EVA per share,with EPS as a comparison Index for performance.The fourth is that EVA return rate has actually hysteresis effects on the targets of the financial structure, with ROE as a comparison index also.This paper uses TDR,LDR,CDR and CLR as well as internal financing structure and external financing structure per share to describe the financial structure of sample companies; EVA return rate , ROE ,EVA per share and EPS are used to describe the performance of sample companies,applying OLS and panel data method to study separately. We draw conclusions from analyzing those series of targets:TDR has negative relation with EVA return rate ,ROE has no effect on financial lever; the optimization lever of TDR can be obtained only in some years;throungh presenting a striking contrast between internal financing structure and external financing structure,in a word,they all prefer external financing rather than internal financing,prefer equity financing rather than debt financing,the order of financing is external financing, equity financing, debt financing; EVA return rate and ROE have actually hysteresis effects on the targets of the financial structure,and EVA return rate has great influences on financial structure such as TDR,CDR,LDR,CLR. ROE has only inapparent effect on LDR,and it has apparent effect on CDR with a short time delay.