Capital Structure Of Listed Companies Of China Steel Industry

Steel industry plays a very important role in economy of a country as a fundamental industry for a long time. The increasing demand of steel provide good opportunities for the listed companies in steel industry of China because the economy of China is entering into a new rising cycle since 2001. It is vital for the listed companies in steel industry of China to select what kind of financing way as a industry that needs much money. Is debt financing better than equity, financing for these companies? Which elements affect the debt financing activities? Should they select debt financing or equity financing?The paper can be divided into the following three parts:The first part is the retrospection of literatures. It includes classical financial theories and modern financial theories. The theories provide theoretical background for the research of capital structure of the listed companies in steel industry of China and give us some hint.In the second part, I analyzed the capital structure of the listed companies in steel industry of China in detail. Firstly, the paper describes the present condition that the low debt asset ratio and the unreasonable debt structure of the listed companies in steel industry of China. Then, I analyzed the determinant elements of the capital structure of the listed companies in steel industry of China and found the cost of capital, profitability and risk are the most important determinant elements. Finally, I concluded that the listed companies in steel industry of China should increase their long term debt to make better use of financial leverage based on the analysis of the three most important determinant elements of the capital structure of the listed companies in steel industry of China.The third part is the financing environment of the listed companies in steel industry and the solutions. The restriction of the commercial bank of China to long-term loan and undeveloped corporation bond market of China both prevent the listed companies in steel industry of China from increasing their long debt. So, somemeasures should be taken to settle these problems, including quickening the reform of the commercial bank of China, developing corporation bond market of our country to provide sufficient sustain for the development of the listed companies in steel industry of China.