Research On Mutual Relationship Of Capital Structure And Operational Performance Of GEM Enterprise

Capital structure problem has been one of the important corporate governance issues which are always concerned by the academia. From the last century, Western scholars have proposed different theories to explore the influence of capital structure on the corporate value, but the system theory on the capital structure is still not formed in our country. The ultimate goal of modern financial management is to maximize corporate value. By studying the relationship of capital structure and corporate performance, we try to find ways to enhance the corporate performance in order to achieve the maximization of corporate value, so it is meaningful to study this issue in terms of both theory and practice.Shenzhen Stock Exchange was allowed to establish Growth Enterprise Market (GEM) and first batch of28companies went public successfully in2009. So far,355companies have gone public through Growth Enterprise Market. This not only enriches the composition of China’s capital market, but also solves the difficult financing problem of small and medium sized high-tech enterprises. The establishment of the GEM is an important initiative for the construction of multi-level capital market. It also plays an important part in prompting the development of high-tech enterprises and has a profound effect on our country’s economy. The SFC issues different qualifications of listing of a company in terms of the Main Board Market and Growth Enterprise Market respectively. And the GEM is mainly for smaller, founded not long, high-tech, high-growth potential enterprises. Because of the difference with the Main Board Market, whether previous conclusions on Capital Structure and Corporate Performance are appropriate to the GEM remains to be determined. Since the time of the GEM’s establishment is short and the number of companies listed on GEM is small, existing studies on the relationship of Capital Structure and Corporate Performance mostly selected one year data, which cannot meet the requirements of the empirical large sample. So it is necessary to study the relationship of Capital Structure and Corporate Performance in the GEM.This article select three-year data of companies listed on GEM based on this consideration, namely154companies in2010,282companies in2011,355companies in2012, and conduct a empirical study on the relationship of capital structure and corporate performance. Most existing studies only examined the effect of capital structure on Corporate Performance, and did not consider their endogenous.In the first stage, we find that these two factors have mutual influence though hausman, and then we establish a simultaneous equation regression models. In the models, we set Comprehensive performance of the company based on factor analysis as the substitution variable for Corporate Performance and set asset-liability ratio as a substitution variable for capital structure, using two-stage least squares equations to do the estimate. To ensure the robustness of the results, we used the Tobin’s Q as a proxy for corporate performance for further study, and finally we reach the same conclusion that capital structure and corporate performance is affected negatively correlated with each other. The increase in corporate leverage is not conducive to the improvement of corporate performance and companies with better business corporate performance usually have lower the proportion of debt financing.The article is divided into the following five parts:The first part is the introduction. It manily introduces the research background and the research significance, and elaborates the research content, research methods and the innovation points, and points out the value of this study.The second part introduces the related theory of capital structure and corporate performance. Firstly, it defines the defination of capital structure and corporate performance. Secondly, it explains the theoretical foundation of capital structure. Finally, it reviews and makes a comment about the domestic and foreign study of the relationship between capital structure and corporate performance.The third part introduces the characteristics of the growth enterprise market, and analyzes the present situation of the capital structure and corporate performance. By describing and comparing with the mainboard market, this part expounds the particularity of the growth enterprise market, and points out the characteristics of financing structure and the overall level of corporate performance in this market.The fourth part is the core of this article, it is about the empirical research on the relationship between capital structure and corporate performance. First of all, it puts forward the hypothesis of this paper, selectes the research sample, sets up the research variables, and sets up simultaneous equations model. Then it carries on the empirical analysis, including the factor analysis of the indexs of corporate performance, the descriptive statistics analysis and correlation test and two-stage least squares regression analysis and robustness testing of simultaneous equations.The fifth part summarizes the conclusions of empirical research and puts forward some suggestions. It summarizes the main conclusions firstly. And then put forward the suggestions of optimiazing the capital structure to improve the corporate performance in the growth enterprise market. At last, it points out the deficiency of this study and the direction of future research.