A Study Of Enterprise’s Capital Structure Policy Choice Based On Perspective Of Managerial Entrenchment

Agent theory suggests that the separation of corporate ownership and operating rightsallows the existence of potential conflicts of interest between managers and shareholders, andthis kind of conflicts will also be reflected on capital structure policy choice. Self-benefitinternal controls would strengthen their position and maximize their own utility by the choiceof financing activities. Therefore, it is impossible to avoid the effect of internal managers inthe research of firm’s capital structure. From the view of theory of control right of capitalstructure this thesis studies the relationship among managerial entrenchment and capitalstructure in the realistic background between insider domination and lower leveragecoexisting in the listed corporations.From combining empirical analysis and normative analysis, this thesis describes aroundthe various factors of the managerial entrenchment behavior, firstly abstracts theoreticalsummary about the relationship between managerial entrenchment and capital structure fromthe available literature, and then, from various angles analysis, the thesis proposes thecorresponding research hypotheses and tests research hypotheses with empirical analysis, next,draws conclusions and analyzes the present problems in managers appointed manner and themechanism of supervision and incentive, last, proposes corresponding suggestions accordingto these problems. This thesis includes four parts: the first part is introduction, mainlydescribes the research background and significance of this paper, introduces the researchframework and reviews the related articles; the second part is the theoretical foundation andresearch hypotheses, from the theoretical basis of the relationship between managerialentrenchment and capital structure, through the analysis of the existing conclusion, the secondpart puts forward corresponding research hypothesis from three aspects: the aspects ofmanagers own characteristic factors, incentive characteristics and constraint supervisionmechanism. The third part separately dose test to the conduction relationship between themanagerial entrenchment and the capital structure, the correlation between the factors whichform the protective behavior and the capital structure; and according to the reality of China,gives corresponding advice to the aspects of perfecting the manager market, perfectingenterprise incentive and supervision mechanisms to avoid the emergence of the managerial entrenchment. The fourth part indicates the research conclusions and main ideas of this thesis,summarizes the limitations of this research to look forward to be further research andproblems on this study.