The Study On The Impact Of Capital Structure On Business Performance Of Listed Aviation Industry Company

Listed companies in China’s aviation industry are the result of the Joint-stock reform of aviationindustry. By2010, there were22aviation industry companies listed in Shanghai, Shenzhen and HongKong. Amid those companies,18of them issued A shares,1of them issued B shares,2of them issuedH shares,1of them issued red chips. Basically, aviation industry companies belong to the militaryaerospace sector in the capital market. Considering its special industrial nature and its vital role in thenational economy, these shares have excellent performance and have been chased in the capitalmarket. With the constant expansion of finance, those companies’ capital structure attracts more andmore concern. Under such circumstance, the study on the impact of capital structure on businessperformance would have certain theoretical and practical significance, which can help the listedaviation industry companies and the other aviation industry companies to optimize their capitalstructure, reduce risk and raise business performance.In this paper, the listed companies in the aviation industry have been taken as a sample. In virtueof the theory of capital structure, governance structure, and the latest research results of performanceevaluation, the relationship between the capital structure and business performance has been analyzed.Then this paper investigates the current capital structure and performance of listed companies in theaviation industry. On the basis of the previous results,17indicators have been chosen from aspects ofprofitability, solvency, operational capabilities, ability to grow. The author further uses the factoranalysis method to evaluate the comprehensive performance of listed companies in the aviationindustry during2008-2010.Furthermore,a regression model has been established to empiricallyanalyze the relationship between capital structure and business performance. The estimations showthat: the proportion of the largest shareholder has a negative correlation with business performance;the top five shareholders’ equity ratio, the proportion of top ten shareholders are positively correlatedwith business performance; the proportion of state-owned shares is not related to businessperformance; As debt structure,the debt rate are related to business performance positively; thecurrent liabilities ratio is negatively correlated with business performance, and the long-term debtratio is not relevant with performance.