The analysis on capital structure of Chinese listed companies

Abstract

This paper describes the development of share market in China. the authors collect the financial material of listed companies and carry out a test as to whether the capital structure theory can explain the debt ratio of listed companies. According to the regressive equations, the authors also attempt to make an analysis to the credit behavior of Chinese listed companies. As a result, we find out that; (I) the Principle-agent Theory and Bankruptcy Cost can explain the capital structure of Chinese listed companies: (2) the Pecking Order of Chinese listed companies is: retain earning, issuing share, and issuing debt.