Research On The Nonlinear Relationship Between Capital Structure And Corporate Performance

Since the reform and opening up policy carried out,China's economic development level continues to improve,and accordingly,the pace of development of domestic companies also gradually accelerated.As the two important factors for the survival and development of the company,capital structure and corporate performance are more and more valued by regulators and different social participants.From the perspective of academic research,the relationship between capital structure and corporate performance has always been an important focus of micro finance research.From the current research situation,although the domestic and foreign scholars have extensive and in-depth investigation for the problem,but the relationship between the two have not reached unanimous opinion.The relating theories and literatures can be divided into two kinds of linear and nonlinear relationship.The study of linear relationship denies the existence of optimal capital structure while the study of nonlinear relationship admits the existence of the optimal capital structure.In addition,from further detailed research,the linear relationship can be divided into positive correlation and negative correlation,and nonlinear relationship is mainly the inverted "U" shaped relationship.Based on the above background,this paper mainly studies the nonlinear relationship between capital structure and corporate performance of Listed Companies in China.First of all,this paper summarizes the relevant theoretical and empirical literatures at home and abroad.And then,based on the theoretical basis,this paper conducts the empirical analysis.First,it puts forward two main hypotheses,then use data of Shanghai and Shenzhen A stock market of 879 listed companies in the period 2007-2016 to conduct empirical analysis.Two conclusions are obtained:(1)in the case of full sample,there is a significant inverted "U" relationship between capital structure and corporate performance,that is,capital structure has a marginal role in promoting the performance of the company.(2)in the case of the property sub samples,between capital structure and company performance,the inverted "U"relationship still exists,but the influence of capital structure of state-owned enterprises under the condition of sub samples for the performance of the company is more rigid.Finally,according to the empirical results,this paper puts forward three policy suggestions:(1)to promote the development of the bond market and play incentive effect of debt financing;(2)to improve current capital market and actively expand financing channels;(3)to push forward effectively and steadily the reform of the state-owned enterprise system and rationally introduce high-quality social resources.