Study On The Optimization Of Firm’s Capitalstructure By EVA As Objective Function

It is true that capital structure will affect its value. Different kinds ofcapital represent different risks and expected rates of return, thus the costof capital varies with the capital structure. The performance also dependson its capital structure. Because of the separation of ownership and controlrights, the value of a firm is highly related with its capital structure. So,research on whether the capital structure is optimal and how to reach theoptimal status is a key to maximize the value of a firm.However, the former studies put more emphasis on the factors whichhave influence on capital structure using dynamic adjustment method andmultiple linear regressions, but this papers describe the optimal capitalstructure. The total capital of a firm comes from debt market and equitymarket with distinguish risks and returns. This paper analyzes the optimalcapital structure from the view of the industry on the basis of the balancebetween risks and returns.This dissertation uses normative and empirical analyses, combines theportfolio theory with capital structure theory. The optimal capital structurewhich could maximize Economic Value Added is modeled and solvedbased on the balance between risks and returns. The optimal capitalstructure varies with the condition of the industry. In the end, presents anempirical study based on Yanjing Brewery (000729.SZ) and other5listedbrewing companies.