Reconstruction Of The Capital Structure

As we know, the dramatic evolution of modern economy has being widening the connotation of "capital". It's well known that human capital has become one of the factors driving the economic development. In the capital structure, the proportion of human capital is going up. Especially in the knowledge-intensive industry, the human capital has being becoming the decisive element. However, even in the non-knowledge-intensive industry, those key human capital is also important to the performance of a company. As though people has recognized the importance of human capital in the economic development, when the enterprises make the financing decision, they often ignore the existence of human capital. In the modern society, the capital structure is called the whole structure no other than human capital is taken into consideraten. On Mar.22, 2005, the Shanghai Pu-dong New District and Shanghai Business Bureau released the " try out measure of the human capital enrollment ". It prescribes shares by human capital can reach the 35% of paid-in capital. This policy provides the practical basis to my study, ay the same time, it set off the practical significance of the study.The author makes use of the method combining normative and positive research theoretical research and empirical research, and tries to make contribution to the capital structure theory after taking the human capital into consideraten. Because this research will reconstruct the traditional capital structure, we must deduce the relative theory logically using normative method. At the same time, the author collects the data of SOEs in Shanghai, and analyses the basic characters when reconstructing capital structure making using of quantitative method.It's well known that the nature of firm and re-cognization to the ownership of enterprise is the basis of reconstructing capital structure. The firm has double nature-------the production nature and exchanging nature. Moreover, the firm istwo-dimensional-------the production structure and institutional structure. Theproduction structure refers to the production element structure or capital structure. In a sense, the firm is the union of material capital and human capital. Modern enterprise is an agreement of asset and human capital. In that, the owner of every element isequal part of ownership, having the right to share the ownership.The ownership affirmation of human capital is the premise of capital structure re-construction. When distributing the quantitative ownership of human capital, we can operate by the whole-capital distribution model, which regards the material capital and human capital as equal paid-in capital. The stockholders will share the ownership by their capital quantity.The attribution and character of human capital ask us to re-construct the concept and structure of capital. As other capital, human capital has some value creation function, belonging to the capital category. We can renew the definition of capital: the asset of creating the value and proceeds over self value. Traditional capital structure only includes equity capital and liability capital. We think that the standard capital structure should include human capital.This paper puts forward the metric model of human capital based on the competitive EVA. The economic added-value created by human capital of enterprises can be decomposed into two parts: the one by monopolization status or industry predominance, the other by operating competence of human capital. The former is non-competitive EVA, and the latter is competitive EVA. The value of human capital should be composed of two parts: one is the part compensating the self value, referring to the salary and welfare, and the other is residual income for the company created by self ability, referring to the competitive EVA. Therefore, the value created by human capital in one time equals the salary, welfare and competitive EVA. When summing the value of human capital, we should discount the future value of it.The author advances the metric model of re-constructing capital structure. After taking the human capital into consideraten, the capital structure of firm is made of three parts: equity capital, human capital, and liability capital. In this condition, calculating the comprehensive capital cost of corporate finance can use the next metric model:WACC=K1 Wl +K2 W2 +K3 W3In that formula: Kl —equity capital cost; K2—liability capital cost; K3 —human capital costWl, W2, W3—the rate of three capital, that is proportion, the summation ofWl+W2+W3isl.Based on the theory construction, this paper randomly chooses 240 SOEs in shanghai as research samples. According to our model, the result shows:l.The average scale of human capital exceeds the one of material capital. The average scale of human capital in high-tech industries exceeds the one in non-high-tech industries significantly.2.The proportion of human capital has exceeded that of material capital. In all the samples, the proportion of human capital reaches 58%.In the 70% enterprises ,the proportion of human capital is over 50%. The proportion of human capital in high-tech industries exceeds the one in non-high-tech industries significantly. It shows that the proportion of human capital is going up. It also reveals the importance of human capital in modern economy, even preponderating over material capital.3.The cost rate of human capital nears that of equity capital. The average cost rate of human capital of 240 samples is 6.53%, and it's near our tentative rate 6.54%. Moreover, the cost rate of human capital of over 50% samples is over 6%. In the whole, it reveals that the cost rate of human capital almost equals the one of equity capital. But for the cost rate of human capital, there is no significanft difference between high-tech industries and non-high-tech industries.4.The cost rate of liability is lower than that of human capital and equity capital. The average cost rate of liability of 240 samples is 3.62%, far lower than that of human capital and equity capital, only corresponding to 55% of the sum of the latter. As a whole, it shows that the cost rate of liability is far lower than that of human capital and equity capital. But for the cost rate of liability, there is no significanft difference between high-tech industries and non-high-tech industries.5.The comprehensive cost rate of re-construction capital structure is about 6%. The average WACC of 240 samples is 5.95%. It reveals that the WACC of every company is a little lower than that of human capital and equity capital, far more than that of liability. But for the WACC, there is no significanft difference between high-tech industries and non-high-tech industries.