The capital structure determinants of Chinese listed companies in Shanghai Stock Exchange

Abstract

Capital structure is found important to the performance of a company’s performance. Lots of studies focus on the determinants of companies’ company structure in developed western countries such as America and the UK. This paper focus on the capital structure determinants of companies in China which are listed on the Shanghai Stock exchange. The possible determinants that were researched in this paper included company size, growth opportunity, risk profitability and liquidity. Whether the influence of these determinants is positive or negative was analyzed in this paper. Financial leverage(D/E ratio) was chosen as the main index to describe the companies’ capital structure. According to the previous research in other countries, company size has a positive relationship with capital structure and other determinants has negative relationship. This paper collected data of companies listed on Shanghai Stock Exchange and analyze whether these relationships are same in China.