• Journal of Digital Convergence
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• v.11 no.11
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• pp.191-196
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• 2013

The proportion of small and medium sized enterprises based on the number of corporations in China is 99%, the number of employees is 80%, and the proportion of GDP is 60%. These facts show that small and medium sized enterprises have an very significant effect on the economic growth of China. However, most of the researches conducted so far have studied large corporations, thus, there are relatively insufficient researches on the determinant of the capital structure of small and medium sized enterprises. Therefore, the purpose of this paper is to confirm the factors that determine the capital structure of small and medium sized enterprises in China. To achieve this purpose, we performed multiple regression method to 45 small and medium sized manufacturing enterprises listed on the Shenzhen Stock Exchange of China. Results of this study are as follows. First, the growth appeared to have a significant positive effect to the debt ratio in 1% significance level. Second, the profitability appeared to have a significant negative effect to debt ratio in 1% significance level. Third, the firm size appeared to have no effect on the debt ratio. Fourth, the secured value and tax shield effect by non-debt appeared to have a weak positive effect on the debt ratio, however these variables showed statistical insignificant.