Empirical Study On The Capital Structure And Performance Of China's Securities Companies

China's securities industry has gone through more than 20 years of history. By the end of 2014, there are a total of 120 securities companies in China, of which 20 companies are listed in Shanghai and Shenzhen stock exchanges. Securities companies have become important participants and components in China's financial system. In recent years, China's weak economy urgently needs a comprehensive reform, and therefore, the way of the securities industry to support economic development is put forward higher requirements. The important position of the securities industry in the national economy let it become the focus of much attention. Due to their needs of business development, China's securities companies have a higher financial leverage compared to other industries. Capital structure is the foundation of modern corporation management. On the one hand, capital structure will affect the value and earnings of the securities companies; on the other hand, the capital structure to a certain extent, determines the securities companies'ability to cope with risk. Although the overall situation of China's securities industry has been greatly improved, compared with the international investment bank, China's securities companies have a large gap in performance. So it is important to study the capital structure of securities companies, to improve the corporate governance structure and the performance of the company.About the study of the relationship between capital structure and corporate performance, domestic scholars are mostly focused on the equity capital, relatively little research on the debt capital. Specialized research on the relationship between debt capital structure and corporate performance of securities companies is rare. Due to their unique financial attributes, securities companies have their own characteristics of high debt operations. Therefore, it is necessary to study the impact of debt capital structure on the performance of securities companies. In addition, taking into account different characteristics of the enterprise at different stages, this paper divides securities companies into the high growth securities companies and the low growth securities companies according to the enterprise life cycle theory, respectively empirical research on the capital structure and business performance.This article will pick up 76 securities companies in China (including listed and unlisted) data from 2006 to 2014 as the sample, and there will be empirical analysis on the relationship between capital structure and corporate performance by using descriptive statistics, panel data regression and other quantitative methods. The specific chapters and the main research findings of this paper are as follows:The first chapter is an introduction. This chapter begins with an analysis of the background and significance of the selected topic of study on capital structure and business performance of securities companies, and then describes the research object and main content, and briefly introduces the innovations.The second chapter is the theoretical basis and literature review. This chapter mainly reviews the related theories and literature, in order to explain the influence of capital structure and debt financing structure on corporate performance. On the basis, the enterprise life cycle theory is introduced to analyze the impact of different growth stages of the financial characteristics on corporate debt capital structure. This part is the theoretical foundation for the empirical part of the following chapters.The third chapter is the analysis on the current situation of China's securities companies. This section first describes the development history and present situation of China's securities companies to further understanding of securities industry. And based on the analysis of China's main business and income, found that the securities company's business model still exists mainly on "channel" type traditional intermediary business, such problem as lack of innovation, serious homogeneity competition. In the end, this part focuses on the liability of securities companies, which are different from the general commercial enterprises.The fourth chapter is the study design of the relationship between capital structure and performance of the securities companies. This chapter first introduces the research samples and data sources of this paper and then divides the sample into high growth securities companies and low growth securities companies by the sub-digit grouping. Based on the previous studies, the explained variables, explanatory variables and control variables are set up, and the research hypothesis is proposed based on the relevant theory and literature at home and abroad. Finally, the panel data regression model is built on the basis of the above.The fifth chapter is the empirical research on the influence of the capital structure of China's securities companies on the operating performance. This part first makes a descriptive analysis of the main variables, and then returns to the sample data through the establishment model, and draws the following conclusions: 1.The capital structure of the securities company will have a significant effect on the business performance, which is applicable to all sample firms; 2.Both current debt capital and long-term debt capital will have a positive impact on the performance of securities companies, and the impact of the current debt capital is greater. Besides, for the low growth securities companies, the current debt capital is more significant than the long-term debt capital, which has a positive effect on the performance; 3. Different type of debt capital has different effect on the performance of securities companies. Financial liabilities and long-term loans do not have a significant positive or negative influence on the securities company's performance; short-term loans to a certain extent has a positive impact on the performance of securities companies, but the significance is not stable; there is a significant negative relationship between the repurchase of financial assets and the performance of the securities companies; under the confidence level of 99%, there is a significant positive relationship between bonds payable and performance of the securities company.The sixth chapter is the conclusion and the policy suggestions. This chapter firstly summarized the results of empirical study and analysis, and put forward three policy recommendations:1. Improve the debt financing channels of China's securities companies to establish an effective debt capital supplement mechanism; 2. Reasonable use of debt capital, combined with the debt risk monitoring system to adjust capital structure; 3. Attention to add equity capital, lay the foundation for the further expansion of business. Finally, this chapter points out the shortcomings of this study.The innovations of this paper are mainly expressed in the following aspects:1. Previous scholars on the capital structure research mostly focused on non-financial institutions, and especially in debt capital structure research based on the securities companies is rare. Therefore this paper in a certain extent makes up the blank in this field.2. The empirical sample includes listed and unlisted securities companies, the observation time from 2006 to 2014, compared with the previous studies have more abundant data to support. So there is a more comprehensive understanding of the relationship between capital structure and performance in the securities industry.3. This paper introduces the theory of enterprise life cycle, in order to reveal the relationship between capital structure, debt capital structure and performance of securities companies in different growth stages.In this paper, the deficiencies are:1. Considering the actual situation of the sample, this paper does not project for all liabilities of securities companies, selecting only a part of important indicators for research.2. Due to considering the samples contained non-listed securities companies and the construction of capital market in China is not yet perfect, this paper uses ROE to represent the performance of the securities companies. As a result, the study focused on the profitability of the performance, lack of consideration for safety and liquidity.