Research On The Impact Of Product Market Competition On The Capital Structure Of Manufacturing Private Listed Companies In China

Some existing studies have found that product market competition will affect the choice of capital structure of enterprises.Based on the financial data of 687 private manufacturing listed companies in our country,the paper make an empirical study on impact of product market competition on the capital structure of manufacturing private listed companies in China using the two-stage least-squares regression model.We find the intensity of industry competition has a negative correlation with the firms’ asset-liability ratio.Besides,we also found that there is a significant positive correlation between company size and debt level,negative correlation between company profitability and debt ratio,positive correlation between asset-backed ratio and financial leverage,and a significant negative correlation between company operating capacity and asset-liability ratio.Finally,taking Wanxiang corporation as example,we confirm that the industry competition has a negative correlation with the firms’ asset-liability ratio.This paper concludes that private enterprises’ low leverage is not only the result of external factor,but also a business competition strategy of enterprises in the industry competition.The research findings could help us understand the capital structure of private manufacturing enterprises and analyze the capital structure adjustment of private enterprises.