Research On Capital Structure And Corporate Performance Of Listed Companies In Chinese Electricity Industry

In1958, Modigliani and Miller proposed the MM Theory; capital structure becomesa research subject of theoretical value and practical significance. Scholars all over theworld research on capital structure problem extensively and in-depth on the basis of theMM Theory. Finally they expand the capital structure theory. The development of thetheory and the practice of the verification are inseparable. In order to test and explain thecapital structure theory, scholars have done a lot of empirical researches. Empiricalresearches of capital structure theory are divided into two field: first, focusing on testingsome theory (Bankruptcy Cost Theory, Agency Costs Theory, Pecking Order Theory,etc.); Second, focusing on the influence factors of capital structure. There are alwayssome differences among the research results.As the basic industry of the national economy, the rationality of capital structure ofthe electric power industry is a significant impact on corporate performance. Finally itwill affect the development of the country’s economy. Due to the increase of current andfuture demand for electricity in our country, the listed companies face a lot of financingproblems. In our country asset-liability ratio of electricity listed companies is very high.It is necessary to study how debt structure and equity structure influence corporateperformance. And it is necessary to optimize the capital structure to control financialrisks and improve corporate performance. In view of the special economic status andcapital structure of the electric power industry, it is of important practical significance tostudy the relationship between capital structure and corporate performance of electricitylisted companies.In this dissertation,52Chinese electricity listed companies of A share market wereselected as study subject between2008and2011. Multiple finance indicators that reflectdebt paying ability, operation capacity, profitability and development capacity wereselected. By using factor analysis method, a comprehensive indicator that measurecorporate performance was obtained. Through specification of econometric model,analysis relationship of debt and equity structure and corporate performance wasobtained. Results indicated that debt structure and equity structure were inversely relatedto corporate performance, development capacity and macroeconomic were positively related to corporate performance. At last some suggestions of optimizing the capitalstructure are put forward to improve the corporate performance of the Chinese electricitylisted companies.