Empirical Study On Relationship Between Capital Structure And Profitability Of Power Industry Listed Companies

With the development of society and economy, the listed companies have become an important part of China’s listed companies in the economic reform and development.The power industry acting as a basic industry almost services all of the production and consumption sectors, which is a common need for economic activities of the whole people.Therefore, it has important theoretical and practical significance to study the relationship between electric power industry of listing corporation’s capital structure and profitability. Also, the discussion of capital structure is undoubtedly one of the most hot topics of scholars at home and abroad. The Capital structure is reasonable is relation to whether the corporate governance mechanism is perfect, the allocation of resources is optimized, and the economic benefit could be improved in many aspects.So far, many scholars have used different methods and empirical data from multiple perspectives doing a more detailed analysis on the relationship between capital structure and profitability of the business. However these studies involve small part of industry in the division. For different industries, capital structure has a significant difference. In view of this, this paper takes the electric power industry as the research object to explore the relationship between capital structure and profitability.Firstly, by comparing the domestic and foreign review of the relationship between listed company’s capital structure and profitability this paper describes the background and significance of this article. Secondly, this paper introduces the concept of the definition of capital structure and profitability, the current capital structure and profitability of the evaluation of basic theoretical background and abroad.Again, this paper carries out a study on the segmentation of the electric power industry’s capital structure and its profitability. This part mainly makes a comprehensive analysis.Then, this paper carried out a study on the segmentation of the chinese electric power industry listing corporation capital structure and profitability. This part mainly conducts a comprehensive analysis by defining the power industry listing corporation and describing its characteristics and status of capital structure and profitability which provides the theoretical foundation for the empirical analysis. The core part of this paper is about to determine some variable selection method of power industry listing Corporation mainly through the evaluation index of capital structure and profitability, and by using the statistical software SPSS to conduct regression analysis based on the collected data analysis. An empirical model of this paper is divided into two steps:Firstly, using principal component to extract comprehensive index of profit ability analysis. The second step is using the capital structure of indicators as explanatory variables, overall profitability indicators as explanatory variables, investigate the relationship between the power of corporate capital structure and profitability.Finally, this paper analysis the results of empirical analysis part, and put forward reasonable suggestions.