Please use this identifier to cite or link to this item: https://hdl.handle.net/20.500.12540/393
Title: The relationship between capital structure and profitability: Evidence from China
Authors: Zhang, Zhixuan 
Issue Date: 2020
Source: Zhang, Z. (2020). The relationship between capital structure and profitability: Evidence from China [Unpublished bachelor's thesis]. Wenzhou-Kean University.
Abstract: The objective of this study is to investigate whether the capital structure has an impact on profitability in Chinese A-share firms. I employ multiple proxies to measure profitability: (1) Return on Equity, (2) Return on Assets, and (3) Profit Margin. I use three proxies to measure capital structure: (1) Ratio of Short-term Debt to Total Assets, (2) Ratio of Long-term Debt to Total Assets, (3) Ratio of Total Debt to Total Assets. Using a large sample of Chinese A-share companies from 2009 to 2018, this paper finds that a significantly negative relationship exists between capital structure and profitability. I use Pearson Correlation Analysis and Ordinary Least Square Regression to test the effect of short-term debt, long-term debt and total debt on profitability, respectively. These results indicate that Chinese listed companies prefer equity financing to debt financing and help managers to find the optimal capital structure.
URI: https://hdl.handle.net/20.500.12540/393
Appears in Collections:Theses and Dissertations

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