Analysis of The Impact of MM Theory on The Capital Structure of Chinese Listed Companies

Abstract

Configuring a firm's capital structure plays a crucial role in achieving the firm's financial management objectives.This paper elaborates the Miller-Modigliani (MM) theoretical model and analyses the academic achievements and limitations of the MM theory.Then, based on the analysis of the current situation of capital structure of Chinese listed companies, it discusses the impact of the theory on the optimisation of capital structure of Chinese listed companies.Finally, combining these theories, suggestions for solving the problems of capital structure of Chinese listed companies are summarised.