The Relationship Between Capital Structure And Corporate Performance Of Chinese Listed Electric Power Companies

Electric power industry is the basic industry of national economy. With the rapid development of national economy, the demand for electricity is increasing. As electric power industry is a capital-intensive industry, capital market is an important capital source for electric power construction. Listed electric power companies gain amount of construction capital form capital market. Weather the company’s capital structure is reasonable or not is directly related to the company’s capital cost, as well as the company’s performance; Among the company’s capital structure influence factors, the company’s performance has important influence on the capital structure decision. Obviously capital structure and corporate performance may have relations that affect each other. Study of the relationship between the two can reveal the effectiveness of company capital structure on corporate performance, and can also provide decision basis for company financing decisions and capital structure decisions.This paper uses Chinese listed electric power companies as research object, and selects data of 37 listed electric power companies from 2006 to 2013 as sample, and chooses asset-liability ratio and return on equity as capital structure and corporate performance index. After the descriptive statistical analysis of the data, panel data granger causality analysis, relevant control variables are used to build dynamic regression model. This paper uses Diff-GMM method to estimate the model and draws the following conclusions:(1) Financing way of listed electric power companies shows "external financing first, and secondly internal financing". The financing order turns to be debt financing first, equity financing next, internal financing last. (2) The capital structure and corporate performance has a two-way effect. The capital structure can affect the corporate performance, and corporate performance, in turn, affect the capital structure. (3) Capital structure has a negative impact on corporate performance. With the improvement of asset-liability ratio, corporate performance declines. Corporate performance also has a negative impact on capital structure, and with the improvement of corporate performance, asset-liability ratio is on the decline.