Study On The Relationship Between Equity Structure And Combination Policy Of Working Capital

The company’s equity structure and combination policy of working capital are closely related. Especially the concentration degree of equity and the restriction degree of Equity will make an important impact on the formulation of a company’s matching policy of working capital. They made the matching policy’s type tend to be different.In practice, with the change of concentration degree and restriction degree of the equity, some companies appear a problem with high level of current assets and low level of current assets, which is called "short cast and long financial ". Or some other companies appear a problem with low level of current assets and high level of current assets, which is called "long cast and short financial". The phenomenon has caused many scholars warm attention and extensive research.While sorted out the relevant literature, the author of this article has found that most previous studies only separately examined the relationship between equity structure and investment policy of working capital (also called current assets structure policy), or the relationship between equity structure and financing policy of working capital (also known as current liabilities structure policy).But, in fact, working capital policy on investment and finance are connected to each other, and work together. If respectively discuss it, we can’t comprehensively observe the risk and profitability of the working capital policy. In theory, matching policy of working capital is the one that comprehensively observe the working capital policy from the perspective of interaction between investment and financing policy. Furthermore, according to the comprehensive changes of current assets proportion, current liabilities proportion and current rate, the matching policy of working capital can be divided into three types, which are called conservative policy, venturing policy and matching policy.The structure of this paper is that:Firstly, the article introduces the background and poses the question, then expounds the framework and method of the research. Secondly, through the literature review and theoretical analysis on equity structure and matching policy of working capital, four hypotheses are put forward in this paper, and makes the empirical research on hypothesis. Once again, basing on the results of empirical research, the conclusions and the Enlightenment of this paper are given. Finally, the article puts forward the insufficient and prospect of the research.Through the empirical research of this paper, we make the conclusions. Firstly, excessive concentration and over-dispersion of equity make the company’s matching policy of working capital tends to be conservative policy or venturing policy. In addition, concentration degree of equity and matching policy is nonlinear. Secondly, the higher restriction degree of equity will make the matching policy of working capital more tend to be conservative policy. On the contrary, it will tend to be venturing policy. What’s more, the relationship between restriction degree of equity and matching policy is nonlinear. Thirdly, manufacturing listed companies in our country, from the overall data, still exist the phenomenon of excessive concentration and weak balance power on equity. And the combination of working capital policy tended to be conservative policy, which is known as "low risk-low earnings". Moreover, it’s a low proportion of the companies who adopted matching policy.This study has certain exploratory of which academic contributions are embodied in the following aspects. From the terms of the research methodology, this paper uses a new method to measure the three types of matching policy of working capital. The method is based on the comprehensive changes of current assets proportion, current liabilities proportion and current rate. Then, from the aspect of research content, the article is not separately considered investment policy or financing policy of working capital, but choose the matching policy of working capital as the research content. Thus, more comprehensive investigation is made of the relationship between equity structure and matching policy of working capital. Finally, from the aspect of conclusion, the paper has got more comprehensive completion than the previous literature.In this paper, there are also some limitations. In terms of research subjects, this article is only listed companies in China’s manufacturing industry as the research object tentative, and can’t summarize the whole picture of all listed companies in China. In empirical research, the related research at home and abroad have not yet reached a mature stage. Thus, the choice of variables, the econometric model, the sample data collection will affect the conclusions of empirical research. Finally, because the sample of systemic risk, the conclusions of this study there are some limitations.