Correlation Between Stock Liquidity And Capital Structure Of The Listed Companies In China

To some extent, Enterprise’s financing decision can affect the whole future of thecompany development, the structure of the enterprise’s capital structure is one of theimportant factors what affect financing decision, so a enterprise by the capital structure of theinfluence of the financing decisions have directly relation with the enterprise value. Thedomestic and foreign relevant scholar of capital structure and the relationship between thestock liquidity has for a more in-depth research, majorities consider between Capital structureand the stock liquidity exist a close relationship. And they also have for a more in-depthresearch and exploration on both the influence mechanism and conditions. Their researchhave a common shortage, which is both of them only for the one-way relationship research,and they rarely have two-way relationship from this Angle theory and empirical research, Thetwo-way relationship between the two for understanding of their action mechanism has moreimportant significance.It is based on the above significance; this article through the use of simultaneousequations for the two-way relationship began research. The main idea is, first of all, domesticand foreign to capital structure for literature review, mainly introduces the capital structuretheory, and then from the micro analysis introduces the present situation of the liquidity affectstock, and with them, for research on capital structure and the relationship between the stockliquidity lay the foundation. Through the present situation of the research on the capitalstructure, mainly from its theoretical basis to find the influential factors of the capitalstructure, to stock liquidity is mainly from liquidity method to find the study factors. And thenbased on the influence factors of both the building and the empirical research model, makes adeep analysis of the operation result. The results to the capital structure of the enterprise andthe stock liquidity exists between the function of mutual influence, is a two-way related. Firstof all, the higher the asset-liability ratio, the greater Stock liquidity. The increase of debt willmake managers to make better investment decision, thus reduce the information asymmetrybetween the manager and investor. This will be good for the future development of theenterprise, so as to improve the liquidity of company stock. Next, the higher the liquidity ofthe stock will not reduce its capital structure, because liquidity is influenced by many stockeffects, such as, a high stock liquidity may provides the convenience of a hostile takeover forcompetition, and threaten the controlling shareholder control, to be on the safe side of thecontrolling shareholders or the conservative management tend to increase short-term debt inresponse, so to improve the liquidity of the stock may also improve asset-liability ratio, etc. Finally, this paper summarized the research conclusion, aim at the conclusion of thestudy of this paper, put forward the policy and the suggestion and also hope that the researchin this paper on the later researchers to provide certain reference.