Abstract:
Through the use of 136 new energy listed companies in our country, based on the MM theorem, introducing the dividend Payout Ratio and External Financing Ratio, we find that the debt ratio, external financing ratio has a negative effect on China’s new energy company’s market value. When a company is with a payout policy, the impact of leverage on the cost of capital is enhanced. Our test shows that both MM theorem and the Ushape cost of capital curve cannot be proved in our analysis. Empirical tests in different regions show that the debt ratio has no impact on market value and the increasing of external financing ratio decrease market value significantly in eastern Areas. While in other areas, the debt ratio has a negative effect on market value, earning ratio has a positive affect on market value. The affection of payout ratio on market value is not significant. When leverage increases, the weighted average cost of capital also increases. In eastern and western areas, payout ratio has a significantly negative impact on weighted average cost of capital. The difference of the explanation of MM theorem and the expansion of the conclusions towards the difference of financial indications in different regions is due to factors such as the characters of the company’s industry, the deepening of capital market and the marginal effect of changes in capital structure.
