Contractual Analysis Of Firm Capital Structure

This paper analyzes the relation between the incomplete contracts and enterprise property right based on the framewoke of incomplete contracts of Grossman, Hart and Moore. It holds the argument that the property right of enterprise includes two kind of firm property right. One is the special property rights by complete contracts, the other is residual property formulated by the incomplete contract. We consider the residual firm property based on the incomplete contracts can embody the essence of the firm property rights of the firm. Then based on the modern capital structure theory, we discuss the contents and the place and function of capital structure from the accounting equality. The different degree of contractual connection leds to the different kinds of capital structure. All of these factors influence the property right structure and governance structure and value of the firm.According to the theory of the allocation of control rights of Aghion and Bolton and Hart, this paper analyzes the allocation of control rights of capital structure. The capital structure have the contingent charateristic of dynamic equilibrium as a result of different demands and position of various partners in capital structure contracts. So we can conclude that there are two lines of optimizing capital structure. One is to transform from the rights and duties of debtor to those of the stockholders and from indirect forced budget constraints to direct constraints of property rights in stock contracts. The other is to transform from the rights and duties of stockholders to those of debtor. The two lines should be taken together.Otherwise, the capital structure can influence the firm value, property right structure, the price of takeover by firm takeover market, we can design different voting to raise firm value. This paper analyzes the relation between the present capital structure and property right, the control right transformation of ST firm, then puts forward some suggestions and policy to optimize capital structure.