Study On The Nature Of Enterprise And Capital Structure Dynamics

The problem of capital structure has always been the core issue of finance, andalso been a question about the efficiency of resource allocation. A large number ofempirical studies have shown that enterprises should not only consider the static in thecapital structure, but also pay more attention to its dynamic adjustment in thefinancing decision. According to the dynamically adjust capital structure theory, thechoice of the goal of enterprise capital structure is a process of dynamic adjustmentbecause of the change of internal and external environment. As for informationasymmetry, financing constraints, and many other restrictions, the actual capitalstructure often deviates from the target capital structure. Due to the presence ofadjustment costs, the enterprises need to constantly adjust their capital structure to theoptimal state in the changing environment. So, whether the Chinese listed companiesmake the dynamic adjustment? What are the differences about the different nature ofthe listed companies, especially about different state-owned listed companies ofgovernment control level on the dynamic adjustment speed and path? All of thesequestions are subject to the theoretical analysis and empirical test, and this paper willbe further explored.In this article, we have reviewed and combined the dynamic adjustment ofcapital structure related theories and literature, and also analyzed the institutionalbackground of China, using empirical research method and dynamic adjustment ofcapital structure model, with the sample data of2007to2012about the Shanghai andShenzhen listed companies, This article test the state-owned listed companies andnon-state-owned listed companies, especially the different levels of governmentcontrol of listed company in the capital structure dynamic adjustment speed and pathdifferences, and draw the following main conclusions:(1) The non-state-owned listedcompanies is faster than the state-owned listed companies about the rate of dynamiccapital structure adjustment speed. In terms of government control level, the higherpart has a fast speed than the lower one, mainly reflected in the level of the statecouncil, provincial and municipal governments and department control.(2) In termsof nature of enterprise and capital structure adjustment path, non-state-ownedenterprises are more inclined to use the commercial credit, state-owned enterprises arepositively related with long-term debt adjustment path and more keen to use retainedearnings. For the provincial and the following of state-owned enterprises, the higher of the government control level, the more adopting long-term debt adjustment way.They have the stronger ability to make structure adjustment through long-termliabilities.(3) This study also found that the county level government and state-ownedenterprise are very similar with non-state enterprises, no matter on the capitaladjustment speed and the adjusting path.Through the study of this article, we enrich the theory of capital structuredynamic adjustment to a certain extent, especially in combination with China’s uniquesystem background, and also go deep into the different levels government control tostudy, and this also become a main research results and innovation points in thispaper.