Empirical Study On Relationship Between Capital Structure And Profitability Of The Listed Companies In Construction Industry

At first,this paper summarizes the related theories of relativity Between capital structure and Profitability, and systematically discusses the theorial base on empirical study, review and analysis on the related literature at home and abroad.at secondly, it gives a analysis on capital structure and profit ability of Chinese listed company in construction industry, based on these theories foundation and literature review,combined the current situation of capital structure and profitability in construction industry,this paper put forward a research hypothesis at thirdly, it select the2008～2010three years the financial data of listed companies in building industry which take empirical analysis on research hypothesis. The reason that this paper chose building industry as the research object is the industry’s impact on capital structure is a negligible factor, as different industries, the company’s operating risk, assets rate.enterprise growth period and many other aspects have different degrees of difference. Therefore, the capital structure is so different, in addition, the construction industry played a very important role in Chinese national economy,and had a positive effect on improving people’s life and developing Chinese economy. On the empirical analysis, the mainly order is to explore whether there is a reasonable interval of assets liabilities ratio in listed companies in China’s construction industry, Profitability of the enterprise in the reasonable interval get to optimum. Finally, the empirical results were economic explanation, and put forward the corresponding policy and suggestion. Finally, the empirical results were economic explanation, and put forward a corresponding policy and suggestion.The innovation of this study reflected in:(1)The angle of study. In the existing literature, many scholars usually assumed that there is a simple linear relationship between capital structure and profit ability which is positively relationship or negatively relationship, but this paper gave a bold hypothesis on relationship between capital structure and profit ability on listed company in the construction industry in the empirical research and used the elastic theory in economics.(2) the innovation of study indexes,in this paper, it uses the principal component analysis method to establish the profitability index analysis,and selects the operating profit ratio, net sales, profit before interest and tax and business income ratio, return on assets, net assets yield (ROE), return on invested capital, total assets net profit rate (ROA)seven financial indexes, and this seven profitability indicators dimension reduct on treatment.(3) The innovation of research object, The existing literature that has an empirical study on relationship between the profitability and related capital structure of the enterprise, which mostly take listed companies in Shanghai and Shenzhen two places as the research object, but few scholars gave a industry segmentation when they had correlation analysis on the listed company’s capital structure and profit ability, There is no prior scholars devoted to related research on capital structure and profit ability of building industry, this paper that take listed company in architectural industry as an example, study the relationship between profit ability the capital structure of the enterprise.