Research On Capital Structure Adjustment Speed Based On Regional Difference

Compared with most developed countries, China has vast territory, but extremely uneven development between the regions. There is huge difference in the scale of financing and financing conditions, between enterprises inwestern Chinaand eastern provinces, so we expect these regional differenceswill affect the cost of financing for enterprises in different areas, thus affecting the speed of adjustment of its capital structure. Therefore, this paper is mainly based on regional differences perspective, to study the capital structure of listed companies in China, to research the factors of adjusting speed.The paper reviews and summarizes the classic traditional theory of capital structure, as well as for dynamic adjustment of capital structure theory and empirical research status both at home and abroad, and discovered the regional factors of capital structuredynamically adjustmentignored before. We studied this problem from5precepts:region isolation of China’s financial industry, regional monetary fund level, financial development, regional capital flows and government intervention. We believe that the region isolation in financial industry led to the cost of financing for enterprises in different areas. The more a regional monetary fund, the higher the level of financial development, the more capital inflows, the stronger government intervention, the cost and difficulty of the corporate finance is lower, thus the adjust speed of capital structure is faster.Then, we conducted a series of empirical test for the theoretical analysis part. First, through the method of non-parametric tests proved that the regional differences in the levels of the corporate capital structure, which is the basis of the premise subsequent dynamic adjustment of differences; Secondly, we come through the static comparative method, eastern, northeastern, central and western adjust the speed differences between the four regions, the east and northeast adjust faster, respectively,16.7%and15.7%, western and central parts of the slower14.5%and13.6%, respectively; Finally, we establish a dynamic adjustment model includes regional factors, to verify the impact of regional factors to adjust the speed, and found that the monetary level of capital allocation, the monetary capital flows and the degree of government intervention to adjust the speed of the corporate capital structure have a significant effect, but no significant impact of the level of financial development.Finally, we make policy recommendations, enterprises, investors and regulators should understandcapital structure adjustment speed differences from the point of regional differences, thus correctly identifying the value of the business and financial risk. Also, the Government should implement differentiated policies for different regions, and to change the existing institutional setup system for commercial banks, to balance the financial resources of the eastern and central and western regions, so that different parts of the enterprise to obtain a more equitable financing environment.