A Dynamic Study On Capital Structure

This paper first introduced the basic concepts and basic theory of capital structure, and then built the dynamic adjustment model of capital structure to analyze the affecting factors witch impact Chinese IT industry listed company's' capital structure. It also analyzed the affecting factors of capital structure's adjustment speed. The purpose of this paper is to study affecting factors of Chinese IT industry listed company's capital structure, adjustment speed and compared with optimal capital structure. At last, this paper provided some suggestions for Chinese IT industry listed company to optimize its capital structure.This paper contains five chapters:Chapter one:Introduction. This chapter introduced the research background, purpose and significance of the paper, research methods, domestic and international study status and so on.Chapter two:Review and analyze the basic theory of capital structure, including the early theory of capital structure, MM theory, trade-off theory, agency cost theory, signaling theory, pecking order theory, control theory. This part of the theoretical analysis provides a theoretical guidance to the empirical study.Chapter three:Design of empirical research. This paper analyzed the affecting factors which impact Chinese IT industry listed company, these affecting factors were:company size, profitability, growth, asset tangibility, asset liquidity and non-debt tax shields. These six affecting factors were also used as the six dependent variables which affect the company's capital structure. The dependent variables for the adjustment of the speed were:distance from the optimal level of capital structure, company size and growth. Then this chapter built the dynamic adjustment of capital structure model to analyze those affecting factors.Chapter four:The empirical test. Empirical results showed that static model and dynamic model obtained unanimous results. For the affecting factors which impact the capital structure, company size and asset tangibility was positively related to the asset-liability ratio, profitability, growth, liquidity and non-debt tax shield was negatively correlated to asset-liability ratio. The distance from the optimal level of capital structure and company size was positively related to the adjustment of the speed, growth was negatively correlated to the adjustment of the speed.Chapter five:Recommendations. This chapter presented a few recommendations for Chinese IT industry listed company to optimize its capital structure, including the recommendation about the company itself and the external financing environment.This paper selected Chinese IT industry listed companies as study object, using the dynamic adjustment model to analyze the affecting factors which impact the capital structure and the speed of adjustment. As it has broken the previous static model, the study results are closer to reality.