Law and economics take the Hypothesis of Economic Man and Perfect Rationality as their basis,maximizing efficiency as their purpose,and expected utility theory as their analytical tool(But the study of Behavior economics has implied that man in action adhere to bounded rationality and bounded benefit oneself.

Based on the limited arbitrage theory and the assumption that the investors are confronted with credit constraints or interest rate differential,this paper studies the relationship between enterprise s capital structure and its market value by means of analyzing the investors limited arbitrage behavior.

This paper collected the data of A shares from 1995 to 2005 listed on Shanghai and Shenzhen Stock Exchange to test the book-to-market effect, and provided explanation of its effect based on limited arbitrage.

Unlike orthodox researches on capital market segmentation,this paper is to analyse this kind of phenomenon at the view of limited arbitrage theory.

From the perspective of behavioral finance,this paper combines the limit arbitrage and irrational trader and makes analysis on pricing efficiency of asset.

Since the over-reaction,tendency trade and the limitation of the arbitrage fund are all considered,the limit arbitrage model becomes more closer to the real market.

It analyzes it from the point of character and effectiveness of articles of association, arguing that they are limited autonomy rules, and responsibly discusses it about the becoming effectiveness process, range of the effectiveness and contents.