An Empirical Research On Characteristics Of The Capital Structure Based On Market Competitiveness Of Various Products

It is well acknowledged by scholars since 1980s that financing decision-making and strategy of product market competition are two interrelated decision making strategies in the enterprise development. Based on the analysis of the characteristics of capital structure and competition in product market, this paper further studies their relationship, aiming at analyzing and testing their correlations.Firstly, this paper analyzes the characteristics and causes of capital structure and competition in product market in contemporary China, proposing the requirements for capital structure in competition in product market, which is the basis for the present empirical study.Secondly, drawing upon data collected from 616 listed companies in Shanghai and Shenzhen, the researcher conducts an empirical study on the relationship between capital structure and competition in product market. It shows that the fiercer the competition in product market is, the lower the asset-liability ratio is, which is beneficial for enterprises in market competition.Finally, for the purpose of using financial leverage rationally and effectively, improving the efficiency of capital allocation, various capital behaviors should be treated differently, it is found lower asset-liability ratios can be easily seen in such industries as Mining, Electricity, Transport, Storage, Postal, Gas and Water production, which fail to use financial leverage effectively; the real estate industry sees relatively high asset-liability ratio, which means great financial risk in this industry.