An Analysis Of The Impact Of Capital Structure On Corporate Performance Of Chinese Multinational Corporations

Since2002, Chinese foreign direct investment has shown rapid growth. Up to the endof2012, China has witnessed nearly20,000foreign invested enterprises being set upabroad. However, under the appearance of rapid growth, failure rates of cross-bordermergers and acquisitions of Chinese companies and the proportion of loss of foreignenterprises are very high. If Chinese Multinationals’ capital structure is reasonable, as theforerunner of Chinese companies which have reformed the system and gone abroad, howto enhance the performance of multinationals, research on these issues has importanttheoretical and practical significance.The significance of this study lies not only in analyzing the variables or paths of howthe capital structure affects the corporate performance theoretically and qualitatively, butalso providing theoretical support for the better choice of capital structure, theimprovement of corporate performance. Meanwhile, setting asset-liability ratio asindependent variable and firm performance (return on equity, main business profitmargins, return on total assets) as the dependent variables, the paper analyzesempirically the relationship between variables by correlation analysis and regressionanalysis, provides data support for improving the capital structure of Chinesemultinational companies and the corporate performance from an empirical perspective.This paper, on the basis of teasing out the relations of capital structure and corporateperformance at home and abroad, regards16Chinese multinationals which have excellentforeign income performances as the research object. Empirical results show that there is aweak negative correlation between corporate performance and capital structure in Chinesemultinationals. It can be concluded that, external supervision mechanisms of the Chinesestock market are ineffective, at the meantime, there are structural imbalances in thedevelopment of the capital markets. In this regard, the supervisory role of the stock market should be improved and the bond market should be developed to help multinationalsoptimize the capital structure to improve corporate performance.