A Study Of Correlation Between Capital Structure And Profitability Based On Listed Expressway Companies

MM theory suggests that capital structure has a positive correlation with the enterprisevalue, trade-off theory and agency theory suggest that capital structure has conic relationswith corporate value, research on capital structure theory has always been the focus ofattention in theory and practice circles. With the continuous development of financialinstruments, capital structure which based on capital market will become more complex, theprofitability is an indicator that the enterprise and its stakeholders focus, from the importantposition of listed expressway companies in the national economy, and the urgent need fordevelopment of practice, and the realistic background of lack a reasonable range ofreference in capital structure, this thesis is going to study the relationships of capitalstructure and profitability with a sample of listed expressway companies.From combining specification analysis, quantitative analysis and empirical analysis,this thesis starts around the seven factors that affect corporate profitability, firstly throughreview and summary the existing relevant literature about capital structure and profitability,we select seven financial indicators reflect profitability, and then, with16listed expresswaycompanies,financial data in period of2008-2012as a sample, using principal componentanalysis method calculate the total score of each enterprise, next, put forward the hypothesisaccording to the theory of capital structure and establish multiple regression model, finally,make recommendations with empirical conclusions. This thesis includes five parts: the firstpart is introduction, mainly describes the research background and significance of this paper,introduces the research framework and reviews the related articles; the second part buildson the related theory and concepts, using the financial data of listed expressway companiesto analyze the problems and trends in highway industry profitability and capital structure;the third part is empirical analysis, firstly we selects indicators which reflect explanatoryvariables, be explanatory variables and control variables, secondly using principalcomponent analysis method to calculate the profitability score of sample enterprise, then,establish a multiple regression model that choose asset-liability ratio and long-term gearingratio as argument respectively, choose profitability composite score as the dependent variable, last, analyze the relationship between capital structure and profitability in highwayindustry to explore the possibility of the existence of an optimal capital structure interval;the fourth part puts forward the corresponding countermeasures and suggestions accordingto the results of empirical above; the fifth part indicates the research conclusions and mainideas of this thesis, summarizes the limitations to look forward to be further research andproblems on this study.