| The theory of capital structure occupies a pivotal position in the finance. Unfortunately, not only none of existing theories and models are "satisfactory" to comprehend the famous "capital structure puzzle", but also its progress has been at a standstill since about2000onwards.To establish a capital structure theory must answer two key basic problems: first, why different sources and different types of capital have different cost of capital? Second, why different capital owners have different powers and interests (the following if not specified, this article will use the " rights " to refer to the "powers and interests ")? This paper thinks that the real market environment is the foundation of financial decision-making. In the past course to establish some financial theory, it is not reasonable to constitute the theoretical elements of market environment as exogenous given assumptions, such as market, enterprise and financing instruments (bond&stock). This paper applys the approach of inframarginal analysis (not marginal analysis) to study real choice of capital structure, because inframarginal analysis uses a dealing-decision model to define financial cost and earning rather than a production function. The purpose and significance of this paper is to research the factors can determine or influence market environment, and puts forward a new theory of capital structure having more explanatory and predictive power to understand real financial decision-ma’:ings.This paper is divided into five parts, respectively, seven chapters share the work. The first part fulfills the introduction and literature review, Chapter One and Chapter Two bear them. Chapter One introduces the significance and goal, methodology, research approach, technical route, definitions of some core concepts of experience and reliability. Chapter Two is literature review. This chapter includes two parts, macroscopic review and microscopic review. The second part of this paper consists of only Chapter Three. The chapter is this paper’s basic analysis framework to study capital structure decision-making. In this chapter, the theoretical definitions of cost and earning refer to the cost and benefit brought by a dealing decision-making, not by a production decision-making. Clearly, based on such definition, the relationship between cost and earning accord with their economics meaning and our real financial experience. Moreover, this chapter discusses the origin and evolution of debt and equity, as well as the mechanism and the influencing factors of capital structure decision-making. The third part of this paper is Chapter Four. The fourth chapter studies the issues, the decision of capital cost, that is the basis in reality to make a capital structure decision. This chapter puts forward a new capital classification and discusses their different effects on capital structure decision-making. The fourth part of this paper includes Chapter Five and Chapter Six. The two chapters present separately a theoritical test and empirical test on the new capital structure theory. The fifth part is Chapter Seven. This chapter summarizes all works and discusses its prospect.The main points of this paper are as follows:1. This paper analyzes and summarizes the economic analysis thought of existing capital structure theories, puts forward a viewpoint that the neoclassical supply-demand analysis framework and the theories of new institution economics does not work effectively on the studies on capital structure.2. This paper is the first one and the only one to interpret two kinds of existing thought of economics in the view of financial management. Using inframarginal economic analysis, this paper puts forward a grand new capital structure theory and its analysis framework. On the framework, this draws a clear conclusion that the system and institutions of property rights is the only decisive factor to decide an economy’s cost level and firm’s capital structure.3. This paper puts forward a new classification of financing source, and researches financing dealing how to decide their equilibria capital cost (that is yield or interest rate) of this two kinds of capital as well as the economic nature and characteristics of this two equilibrium.4. This paper practices the methodology of positivism economics. From two aspects theoritical positivism and empirical positivism, this paper tests its validity of the new capital structure theory. And the test results prove the theory proposed in this paper as an effective theory.In a comparatively absolute words, at least in the eyes of most financial experts, all of human’s history is just a history of financial management. No matter economists and financial experts do their analysis work at any time or any where, they must begin outspread their theories from the theoretical origin, that is division of labor and specialization, to understand and to interpret man’s financial decision-making and its cost and income. Moreover, this research process would emerge the dynamic nature of decision. In a simple word, it is unnecessary using a parameter or variable of time painstakingly usually. At the same time, a proper understanding on the economic definition of costs and benefits would not lead these so-called empirical literatures that their substantive contents are to find some empirical evidences into the mainstream of positivism economics research. Why do we need a theory and to renew it? Because man’s practical financial practices are so abundant, complicated and full of levity that man has to create and use a concise theoretical system to summarize, to predict and direct his financial decision-making. The answer of "capital structure puzzle" hides in the human’s the most basic, the most simple, the most intuitive and the most difficult to describe his experiences of financial decision-making, that is, to get, you must pay its costs; to get the best, you must reduce your costs as possible in the limits you can bear and pay for it. The modern theories of neoclassical economics, finance and financial management mistakes a real firm’s capital structure, that is a result lead by the division of labor and specialization, as the given premise condition to research and develop the division of labor and specialization. These theories reversed order have resulted in many paradoxes and puzzles which the theories of neoclassical paradigm cannot interpret and describe effectively. Division of labor and specialization is the basis which an economy is built upon and runs continuously. In another word, the capital structure, that is how to organize economic resources most economically, is just an expression form of division and specialization. In short, the nature of capital structure choices and decisions is how to select effectively an organized economy; the capital structure theory behaves not only a theory of financial management full of microscopic meaning but also a management science built upon solid economic analysis thoughts and financial experiences and covered all knowledge of economic management in the mankind history. |
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