Capital Structure And Product Martet Competition Contract Theory Study In Listed Conmpanies

With the inconsistence between neoclassical contract theory assumptions and the realities, moderncontract theory shifts its exogenous nature of paradigm to the endogenous one through the introductionof asymmetric information, bounded rationality and imperfect competition assumptions. Under thisbackground, capital structure theory develops a new system which has the agency conflicts amongshareholders, managers and debt creditors as the subject on the basis of modern system which focuseson tax and bankruptcy factors.As an important branch of the new system, capital structure and product market competitiontheory makes the interaction of capital structure and product market competition decisions as the mainthread and reflects the agency conflicts of capital structure into the product market of the company. Itopens up a new channel by which capital structure affects the company value and becomes the frontierof capital structure contract theory. So far, the theory basis research and extensive empirical tests in thisfield are still needed. The thesis dedicates to the essence of the interaction and tries to give the practiceof China's listed companies some reasonable explanations and theoretical guidance by building modeland corresponding empirical analysis.Based on the literature study, the thesis analyzes the contract theory basis of the link betweencapital structure and product market competition and draws the conclusion that the interaction betweenthem builds on the basis of enterprise contract attributes, makes maximizing shareholders value as theobjective and reflects principal-agent and control transfer ideas of modern contract theory. It is theextension of the agency cost theory of capital structure in enterprise product markets.The interaction is studied from three perspectives, product market competition, capital structureand agency conflicts. Firstly, the thesis creates a flexibility option model of capital structuredecision-making. Its new "pecking order"theory gives an reasonable explanation to the equityfinancing preference behavior of China's listed companies. The linear fixed effects regression supportsthe conclusion of the model. The nonlinear regression further gives the evidence that differentindustries the degree of product market competition impacts on capital structure is different and that itis the trade-off results of financing flexibilities and financing costs. Secondly, the thesis extends theclassical B-L model and develops simultaneous equations under long-term demand uncertainty conditions. The corresponding empirical test shows that long-term debt financing can strengthen thelisted company's price competitiveness, and the product competitiveness can also be strengthen throughthe positive pass relationship between them. Thus it becomes the new idea to ease the problem ofexcessive competition in coal industry. Finally, with thinking of two types of agency conflicts amongshareholders, managers and debt creditors, the thesis establishes dual effects of capital structure model.The introduction of the cross-term empirical study shows that both capital structure and product marketcompetition and their interactions have an important role on the company agency costs. In thisinteraction, the higher the concentration of company stock, the weaker the incentive effects of productmarket competition, and there is a complementary relationship between product market competitionand equity agency costs and an alternative one between product market competition and debt agencycosts. The conclusions have important theoretical guidance roles on the practice of China's listedcompany governance reforms.The nature of the link between capital structure and product market competition is agencyconflicts. The combination of contract conflict theory and practices of listed companies under thecontext of China's transition system, and the depth analysis on conducts of business, industries andcorporate governance issues, give the theory guidance and policy recommendations for increasingcorporate value and deepening market system reforms, and thus enrich the field of strategic capitalstructure research.