The Adustment Speed Of The Direction Of Capital Structure’s Deviation Across Financial Constraint

Dynamic adjustment theroy of capital structure proves that enterprise can get its value maximization’s goal of capital structure, on the basis of weighing the tax benefits and financial distress cost.but due to random events or all levels of factors, the goal of the enterprise capital structure changes all the time, as a result, the enterprise’s actual capital structure and target capital structure are always different, in order to reduce the enterprise’s cost of capital and maximize the enterprise value, enterprise has motive power to adjust its actual capital structure to target capital structure, at the same time due to the presence of adjustment costs, in the process of capital structure adjustment to the target the enterprise can only make a part of adjustment. Adjust speed stands for the speed to approach the target capital structure, reflects the size of the adjustment costs.In recent years, many scholars build dynamic model to explore the influencing factors of the speed of adjustment on the basis of dynamic adjustment theory of capital structure, but most of studies have focused on the company characteristics, macro economic variables, and little of them pay attention on the company’s direction of deviation of capital structure’s influence on the adjustment speed, this article uses data from 2004-2013 Chinese listed companies to empirical research direction of deviation of capital structure’s influence on the adjustment speed in the perpective of financial constraint.In this paper we use Tobit maximum likelihood estimation method to estimate the company’s target capital structure, and combining the system of generalized moment estimator (SYS-GMM) to research the relationship among the diretion of deviation of capital structure, financing constraints, and adjustment speed, the research results show that the difference of the direction of deviation of capital structure led to the asymmetry of adjustment speed, and the company capital structure’adjustment speed marked acceleration downward of the target captial structure,and slow down upward significantly. The enterprises with light Financial constraints adjust faster than with heavy financial constraints. The enterprises with heavy financial constraints are more sensitive to the direction of deviation of capital structure. Enterprises with heavy financial constraints adjust slower when the direction of deviation is upword. In addition, considering of the influence of the industry characteristics of adjustment speed, and based on the robustness, in this paper, we give a industry classification of overall sample, the result shows that capital structure has a significant difference among different industries, but the asymmetry of adjustment speed’s results are still consist with the conclusion of the full sample.