An Empirical Research on the Adjustment Approach of Capital Structure in Chinese Listed Companies

The choice of the adjustment approach of capital structure is the result considering company characteristics and outside environment. According to the balance sheet we discussed five kinds of adjustment approaches of mercantile credit, short-term debt, long-term debt, stock issuing and retained earning, and empirically analyzed some factors affecting these adjustment approaches based on the panel data of 866 non-financial listed companies in China from 2002 to 2005. The regression results show the asset tangibility, profitability, growth, credit, state-owned holding and government intervention are significant related to the above adjustment approaches respectively. In the light of these empirical results, we can obtain some methods to optimize the financing structure and improve the firm value.