China's High-tech Start-ups Capital Structure Empirical Research

There is an extensive theoretical literature of capital structure since the MM theory developed. The empirical research concerning capital structure is always a hot topic of research. In China, most studies take the listed companies as samples while there is little research on the capital structure of Chinese high-tech start-up enterprises because of the lack of data sets.Firstly, this thesis briefly reviews the essentials of several main capital structure theories and introduces the research conclusions of the relationship between capital structure and life stage. This thesis then summarizes the main financing channels of high-tech start-up enterprises in China: bank loan, angel fund, venture capital, strategic capital and governmental support capital.Secondly, by descriptive statistics of the high-tech start-up enterprise sample and comparing the results to the high-tech listed company sample, this thesis analyzes the characteristics of operations and capital structures of high-tech start-up enterprises,。It is found the high-tech listed companies are more profitable and grow faster than the listed high-tech corporations. In addition, the start-ups are averagely less leveraged than the mature firms due to their weaker capacity of outside debt financing.Thirdly, this thesis estimates the impacts of capital structure, venture capital and enterprise type on the enterprise performances. The results show that debt level is positively related to enterprise performance, enterprises with venture capital backed don't perform better than the others, and enterprises founded by individuals perform better than enterprises founded by organizations.Fourthly, by testing the determinants of capital structures, we find that profitability and firm size relate to capital structure similarly in both high-tech start-up enterprises and high-tech listed companies, while growth and collateral value of asset influence them differently. Moreover, the high-tech start-up enterprises founded by individuals have higher short-term loan ratios than the ones founded by organizations, and the venture capital backed enterprises don't differ from the others in capital structure.