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Capital Structure Analysis of rationality

[Abstract] This article analyzes the listed companies Capital Structure, pointed out the capital structure of listed companies is reasonable, and further recognized that such one-sided rationality and the formation of roots. That the solution is to realize the full circulation of measures, from the fundamentals on the transformation of the entire Securities the market.
[Key words] the rationality of the capital structure of listed companies

I. Capital Structure of Listed Companies

1. predominantly equity financing. In accordance with the capital structure theory, the effect of debt tax saving, moderate cost of debt financing for the enterprises to reduce financial leverage effect with a certain proportion of the liabilities can significantly reduce their overall cost of capital; and theory, in order to maximize shareholder wealth objectives listed companies in the decision-making on the funding strategy in pursuit of optimal capital structure must premise. But look at the capital structure of listed companies in China, the result is not the case, only a very small number of listed companies to issue corporate bonds over, and the less the company's distribution plan to take the form of cash dividends, stock dividends and multi-oriented. The placement of shares of listed companies in vogue, there is excessive preference for equity financing.
2. shareholding concentration. China's listed companies are mostly
3. liability structure is irrational. Data show that although the debt ratio of listed companies is not high, but the debt structure is extremely unreasonable, high levels of current liabilities. Period due to financial and debt asymmetric rise in interest rates will increase bankruptcy risk.
4. Capital Structure little flexibility. Capital Structure Adjustment of elasticity of small, heavy debt stock derived light phenomenon, embodied in the choice of financing instruments, convertible bonds, redeemable bonds and other very flexible financing tool, has not been effectively utilized.

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

1. the overall poor performance of listed companies, the source of financing is limited.
2. equity financing and low cost. 3. Shareholding structure special.
4. imbalance in the capital market, bond market imperfections.

Third, optimization of capital structure of listed companies means

1. balance sheet structure optimization
(1) an increase in the capital structure of listed companies debt to increase the share capital structure of listed companies in the proportion of debt.
(2) according to different industries and historic choice to maintain the capital structure of listed companies listed company, a listed company to maintain a long-term so that the capital structure in a point, either in theory or in fact do not have operational, because the capital structure, with the company's external conditions and internal constraints change, and the environment in which the company is changing all the time, so listed companies should be based on the actual situation of their own to develop an optimal range of capital structure, only the company's capital structure activities in the region need to adjust, but once over the region will need to be adjusted. But how to determine the value of the region at both ends of the difficulties of the proposal, if the company determined the cost of the upper and lower threshold is too high or the value of the company's limited ability to determine the domain, then, should pay attention to both ends of the terminal value of the options listed companies in which the reference industry and its history, the history of the capital structure to determine the running value. 2. The development of corporate bond market, debt structure optimization
from the current situation, the bond market may be a breakthrough from the following:
(1) select the performance excellent, good reputation as the bonds of listed companies market plots;
(2) issuance of convertible bonds as the development of corporate bond market transition;
(3) corporate bond issues require innovative;
(4) professional development of bond investment funds;
(5) the introduction of foreign credit rating agencies, strengthen the corporate bond rating.
3. shareholding structure optimization
(1) to improve the liquidity of the stock market. Improved stock market liquidity, primarily through state-owned shares to achieve, by the above analysis, we obviously can see that state-owned shares would contribute to improving the liquidity of the stock market, which can increase the information content of stock prices, thus managers to design more relevant compensation contract.
(2) conspiracy to prevent another major shareholder, occupied the interests of minority shareholders and creditors, the major shareholder in the Chinese market collusion between the interests of minority shareholders against the growing phenomenon, and there are increasing trend.
(3) improve the relevant legal regulations and speed up system construction delisting of listed companies. Listed company's capital structure optimization and corporate governance structure is needed to further improve all aspects of coordination and effort, and this process of legal norms and institutions is essential to further improve and perfect, from a certain point of view that the law timely given enough support to determine whether we can complete this work smoothly.
(4) take over the market, nurturing and promoting the reorganization of listed companies. Take over the market exists, the increase in restructuring activities, will help standardize the behavior of managers, optimize capital structure. At present, the constraints take over the market growth in China is largely due to poor liquidity of shares of listed companies, and its roots in the state shares and legal person shares can not be in circulation, and promote circulation of state shares and legal person shares has become the consensus of academic and management.
4. to strengthen the signal disclosure management, building an effective signaling mechanism
modern capital structure theory based on asymmetric information, capital structure optimization of asymmetric information the process is essentially the mitigation process, through optimization of capital structure, erected between principal and agent a message channel, and the formation of an effective restraint and incentive mechanisms to reduce the information asymmetry caused by the difficult financial investment transactions, improve [u] financial market efficiency. However, capital structure optimization is a cost, and we must strive to reduce the cost of capital structure optimization, strengthen information disclosure management, building signal transduction mechanisms, is to reduce the cost of capital structure optimization and effective means.

IV, policy recommendations and conclusions

Through this analysis, we understand the capital structure of listed companies is reasonable, and further recognized that such one-sided rationality and the formation of roots. Measures is obvious solution is to realize the full circulation, from the fundamentals on the transformation of the entire stock market. China's securities market regulatory authority have long recognized this problem and in 2005 began a series of split share reform and consolidation. The circulation is a long process, so in the process of share reform, it is necessary to note that:
First, to prevent the expropriation of minority shareholders interests, specifically, is to prevent major shareholders listed occupation the company's capital and requiring listed companies to increase their security behavior of punishment.
Second, to strengthen the supervision and review of related party transactions. Since a large number of companies raising funds, but the lack of corresponding project,[link widoczny dla zalogowanych], when funds will be invested in projects related parties to realize benefits transfer. In addition, we should vigorously develop the capital market, especially in the debt market for financing of listed companies to establish multi-channel access. And as soon as possible to establish a fair and transparent enterprise credit evaluation system. For the capital structure of listed companies and Corporate Performance consistent with the theory, a good debt financing environment, enabling the company to be fair in this environment, competitive financing, so as to make the company's capital structure to play a binding role of performance. Through the actual data and system level from both a combination of analysis, the main conclusions are the following:
First of all, in general, listed companies in China currently low rate does not reflect the balance of its capital structure is reasonable. This is because listed companies in China have a common preference for equity financing, and this form of financing preference shares is split from the background of the particular system. It should be noted that this preference is not to seek to maximize the value of the company, therefore, lower risk of capital structure does not bring value to the company.