Study on the Correlation Between Capital Structure and Corporate Performance of Small and Medium Enterprises in Hebei Province

This paper bases on the current capital structure and corporate performance of small and medium enterprise (SME) in Hebei Province, uses debt-to-asset ratio(DAR) to reflect the company's capital structure, ownership concentration (X)to represent the equity structure of enterprises, and return on equity (ROE) as the indicator for corporate performance. The paper uses data from 1998 -2008 and conducts and empirical analysis on the correlation between capital structure and corporate performance in the perspective of the overall average development level of SME in Hebei Province. It's concluded from the analysis that debt-to-asset ratio and ownership concentration are both positively correlated to corporate performance. Based on this conclusion, the paper proposes relevant strategies and policies suggestions for the enterprise's development.