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Reasonable analysis of the capital structure of listed companies

Author: LiuZuoFeng From: www.yourpaper.net Posted: 2010-01-06 02:50:23 Read:
[Abstract] This paper analyzes the current situation of the capital structure of listed companies in China, pointed out that the reasonableness of the capital structure of listed companies in China, and further recognized that such a reasonable one-sided, and the formation of the root causes. That solve the measures is to achieve full circulation, from the transformation of the entire stock market fundamentals.
[Key words] the reasonableness of the capital structure of listed companies

First, the capital structure of the status quo of China's listed companies

The equity financing dominant. In accordance with the theory of capital structure, the liabilities of the tax saving effect, moderate financial leverage effect liabilities for enterprises to reduce the cost of financing, a certain proportion of liabilities can greatly reduce the cost of capital; theory, in order to maximize shareholder wealth target listed companies in the funding strategy decisions inevitable pursuit of optimal capital structure. Throughout the capital structure of listed companies in China, the result is not the case, however, only a handful of listed companies issue corporate bonds, and the company's distribution plan less take the form of cash dividends, and stock dividends dominated. The Rights Offering vogue, there are excessive preference for equity financing.
2 options excessive concentration. China's listed companies are mostly due to the dominance of the "type.
3. Liabilities structure is irrational. The data show that the listed companies, although the balance was not high, but its liability structure is extremely unreasonable, high levels of current liabilities. Due to the asymmetry of the funds and liabilities term due to rising interest rates and increase the risk of companies going bankrupt.
4 small capital structure flexibility. The capital structure of listed companies in China to adjust a little flexibility, light weight stocks bonds derivative phenomenon, the specific choice of financing instruments, convertible bonds, redeemable bonds very flexible financing tool, has not been effectively utilized.

Second, the main factors to affect the capital structure of listed companies in China

The overall poor performance of listed companies, the endogenous financing is limited.
The low cost of equity financing. The special ownership structure.
4. Imbalance in the capital markets, the bond market imperfections.

Third, the optimization of the capital structure of listed companies in ways

Balance structure optimization
(1) to increase the proportion of debt in the capital structure of listed companies to increase the proportion of debt capital structure of listed companies.
(2) depending on the industry and the historic choice to maintain the capital structure of listed companies, listed companies, the long-term so that a listed company to maintain a capital structure point, either in theory or in fact not operable. corporate capital structure changes with changes in external conditions and internal constraints, while the company's environment where time changes, listed companies should be based on the actual situation, the development of an optimal capital structure interval Only the company's capital structure in the region activities without adjustment, but once over the region need to be adjusted. But how to determine the value of both ends of the region is the difficulty of the proposal, if the company determine the cost of the up and down the field value is too high or the company determine the limited capacity of the field values ??should be noted that the reference listed companies in which both ends of the end value selection the historical run value of the industry and their own history of the capital structure to determine. 2. Development of the corporate bond market, debt structure optimization
From the current situation, the development of the bond market may break from the following areas:
(1) performance excellent, reputable listed companies as the experimental field of the bond market;
(2) the issue of convertible bonds as a transition to the development of the corporate bond market;
(3) the issuance of corporate bonds need to innovate;
(4) development of a bond professional investment funds;
(5) the introduction of foreign credit rating agencies, strengthen the rating of corporate bonds.
Shareholding structure optimization
(1) to improve the liquidity of the stock market. To improve the liquidity of the stock market, mainly by state-owned shares, by the above analysis, we obviously can be seen, the state-owned shares to help improve the liquidity of the stock market, which can increase the information content of stock price, pursuant to which the manager compensation contract design more practical significance.
(2) to prevent large shareholders of mutual conspiracy to occupation of the interests of minority shareholders and creditors listed in China, the major shareholder of collusion against the interests of the minority shareholders the growing phenomenon, and there are more severe.
(3) improve the relevant laws and regulations and to speed up the construction of listed companies delisting system. The optimization of the capital structure of listed companies in China and further improve the corporate governance structure is the need of the cooperation and efforts of all aspects, and legal norms in this process and further improve and perfect the system is essential, from a certain point of view, the law timely given enough support to determine whether we can successfully completion of this work.
(4) to actively cultivate takeover market, promote the restructuring of listed companies. Take over the market, the increase in restructuring activities, help to regulate the managers of behavior, and optimize the corporate capital structure. Currently, restricting China to take over the development of the market, mainly due to the poor liquidity of the shares of listed companies, which is rooted in the state-owned shares and legal person shares can not flow, circulation has become the consensus of academia and regulatory authorities to promote the state-owned shares and legal person shares.
4. Strengthen the signal disclosure management, build effective signaling mechanism
Modern capital structure theory is built on the basis of asymmetric capital structure optimization process is essentially the mitigation of asymmetric information, optimize the capital structure, erected an information channel between the principal and agent, and the formation of a effective constraints and incentives, thereby reducing asymmetric information caused by difficulties in financing and investment transactions, and improve the operating efficiency of the financial markets. However, the capital structure optimization is also the cost of the end, we must strive to reduce the cost of capital structure optimization, strengthen information disclosure management, build signaling mechanisms to reduce capital structure optimization cost effective means.

Policy recommendations and conclusions

Through the above analysis, we understand the rationality of the capital structure of listed companies in China, and further recognized that such a reasonable one-sided, and the formation of the root causes. Measures to solve apparently, is to realize the full circulation, from the transformation of the entire stock market fundamentals. China's securities market regulatory agencies have long realized this problem, and in 2005 began a series of rectification of the split share. Full circulation is a long-term process, the share reform process, you need to pay attention to:
First, to prevent the expropriation, the interests of small shareholders, specifically, is to prevent large shareholders funds of listed companies and its guaranteed behavior requires listed companies to increase the punishment.
Second, to strengthen the monitoring and review of related party transactions. As enterprises to raise a lot of money, and in the absence of the project, when will funds to invest in projects of related parties to realize the benefits transfer. In addition, we must vigorously develop the capital market, especially the debt market, the listed company's multi-channel financing to establish the channel. And a fair and transparent corporate credit evaluation system should be established as soon as possible. Relations consistent with the theory of the company's capital structure and performance of the company to make the listing, a good debt financing environment, enabling the company to fair financing competition in this environment, the company's capital structure in order to play a binding effect on performance. From the combination of two aspects of the actual data and system level analysis, the main conclusions are the following:
First of all, in general, lower asset-liability ratio of listed companies in China does not mean that its capital structure is reasonable. This is because China's listed companies have a general equity financing preference, and the preference for the formation of such a financing is a special system of background from the split share. It is worth noting that this preference is not to seek to maximize the company's value, the lower the risk of capital structure is not brought to the company value.
Second, the existing capital structure theory does not fully explain the rationality of the capital structure of listed companies in China. From an economic point of view, static equilibrium theory and the earlier order of preference theory, the theory of static equilibrium seems to be able to better explain the financing behavior of listed companies in China. This is because the listed companies in China is highly dependent on the overall level of external financing, equity financing, and does not consider financing from internal to external financing of this order of preference.
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