Capital Structure and Corporate Performance: Evidences from Chinese Small and Medium-Sized Firms

Abstract

This paper investigated the relationship between capital structure and corporate performance. Differing from former studies, the paper stood on a special position of small and medium-sized enterprises and evaluated corporate performance by factor analysis method. Based on 608 observations, conclusions show that capital structure can improve corporate performance for small and medium-sized enterprises. Testing results also indicate that asset-liability ratio would play a more important role in earning management and decision of capital structure in practice.