The Impact of Capital Structure on Financial Performance of Agricultural Listed Companies in China Based on Multiple Linear Regression Model and Data Mining

Abstract

Background: With the transformation and upgrading of the economy, the market capitalization scale of agricultural listed companies has become larger and larger, but the problems caused by the unreasonableness of their capital structure have become increasingly prominent. This study aims at examining the relationship between capital structure and financial performance of agricultural listed companies in China.
 Methods: Secondary data are obtained from annual financial statements of the sampled firms over the period 2018-2022, and analyzed statistically using multiple regression models. The capital structure indicators refer to total debt ratio (TDR), short-term debt ratio (STDR), and long-term debt ratio (LTDR), and return on assets (ROA) and return on equity (ROE) are the performance proxies.
 Results: The results reveal that TDR and STDR have strong negative relationships with ROA and ROE, while LTDR has insignificant correlations with financial performance.
 Conclusion: The outcomes imply that agricultural companies should pay regular attention to the gearing ratio and strive to maintain good capital mix. They should depend less on short-term debt and could properly employ more of long-term debts in financing to improve profitability and promote sustainable development.