The Research Of Dynamic Capital Structure Adjustment Of Enterprises

Captial structure is always a hot topic in the field of finance. Dynamic capital structure theorythinks, capital structure exists in the enterprise, and constantly adjusts to the target structural. Areasonable capital structure is helpful to realize the maximization of enterprise’s value. But becauseof the existence of adjustment cost, the enterprise’s actual capital structure will be temporarilydeviates from its target capital structure. In the adjustment process to the target capital structure,Enterprise will be affected by some external environment factors such as product marketcompetition, macro-economy and national policy.This paper describes the present situation of enterprises’ capital structure and product marketcompetition in our country, and analyzes the mechanism that product market competition effect thecapital structure at the viewpoint of competition strategy, competition degree and the competitionenvironment, and empirical tests the effect of external environment factors of different competitivemarket and competitive strength on the deviation degree and adjustment speed from actual capitalstructure to the target capital structure by building capital structure adjustment model and takingadvantage of some related panel data of Chinese listing corporation in A share market from2005to2010. This study find that: with the enhancement of competitive intensity, actual capital structuredeviates from its target capital structure less.Empirical results verify the theory research. In terms of deviation degree of capital structure,the competition factors’ incidence of our product market on listing corporation in competitiveindustry is bigger than that in monopoly industry. In the competitive industry, there is asignificantly positive correlation between the market competitiveness of products and the deviationdegree from enterprises’ actual capital structure to their target capital structure, and the performanceis not significant in monopoly industry; in terms of the adjustment speed of capital structure, thelisting corporations in competitive industries make some adjustment on the capital structure. Andthe listing corporations in monopoly industries depart from the adjustment of capital structure. Thecompetition factors’ influence is not significant on the capital structure adjustment speed of listingcorporation both in competition and monopoly industry.