Arrangement for Capital Structure in the Framework of Corporate Governance

Using the method of principal component analysis, the paper conducts a systematic study on the issue of how corporate governance influences capital structure. The study manifests the results that the proportion of circulation shares, the ability that other big shareholders contend with the first biggest shareholder, the proportion of corporation-owned shares, and the frequency of directorate meetings all have a positive relationship with the liability level. Meanwhile, the concentration degree of owners＇ equity, the proportion of state-owned shares, the phenomenon that one person serves as both chairman of directorate and general manager, and the intensity of competition in product market are all negatively related to the level of debt. Finally, the scale of directorate, the proportion of independent directors as well as the percentage of management-owned shares have no significant relationship with the capital structure. The statistic analysis also shows that the proportion of independent directors of some Chinese listed companies does not meet the regulation of the CSRC. In addition, the paper tests the impacts of corporate operating characteristics on capital structure.

Arrangement for Capital Structure in the Framework of Corporate Governance