Discrete Phenomenon Of The Company's Capital Structure In The Industry Study

Research on capital structure is a classical and charming subject. The subject regains its attention and importance after the introduction of information economics, game theory, corporate governance and industrial organization theory in the 1970s.Meanwhile, capital markets'development and improvement in China facilitate going-public of tens of thousands of Chinese companies. At the same time, financing sources for them are diversified. Nowadays Chinese companies could raise money from banks, fixed-income markets and share markets. Diversification and differentiation of financing sources enlarge the degree of intra-industry capital structure dispersion. In order to find the specific reasons behind this ever-enlarging dispersion, research on capital structure at Chinese capital markets attains popularities both in China and abroad.This paper is focusing on the phenomenon of intra-industry capital structure dispersion. We pay much attention to reasons related with corporate governance and industrial characteristics. With basic and relative complicated statistical analytical tools, we process the research in two different perspectives:one from company level, and the other from industry level.In this paper, we find that:(1) with the improvement of corporate governance, the degree of leverage ratio dispersion is relatively weak both at company level and industry level, which means that improved corporate governance is good for reducing capital costs and raising investment yields for shareholders. (2) More concentrated industries display relatively higher dispersion of leverage ratio, and at the same time, dispersion of leverage ratio also relates to competition strategies. Larger differences of competition strategies see higher level of leverage ratio dispersion. And (3) regarding research methods, if one wants to examine capital structure from industry characteristics, indicators with strong industrial properties may be good choices (such as industry competition, average asset size and asset liquidity in the sector); while if one prefers to relate capital structure with company characteristic, micro variables, such as administration costs, shareholding of boards and the number of independent directors and supervisors on board, would provide more information for research.