The Research On Convergence Of The Capital Structure Within The Industry

A large number of theoretical and empirical studies have shown that the capital structure of listed companies exists in a significant convergence within industry, industry factors are important factors affecting capital structure, However, most of the existing literature to explain the common factors from industry, and there is no study reaserch the reasons that into the industry level of convergence capital, in addition, in the study of factors affecting the capital structure, the existing literature mostly consider only the company's own characteristics and common factors of the industry and market, they also ignore other companies within the industry t o consider the impact of capital structure factors.In fact, both from behavioral finance point of view, or from the perspective of product market competition, when a company making financial decisions, it is impossible that it do not considering the behavior and characteristics of other companies within the industries. Therefore, in this paper I study and resolve the capital structure of industry convergence from the influence of other companies in the same industry.Theoretically speaking, the liquidity assets theory, the regret aversion theory, the product market competition theory, the information external reputation theory, the rewarding theory and the lack of capacity theory and so on, they explain how the other companies within the same industry affect a particular company's capital structure, generally speaking, these theories can be divided into two categories: corporate behavior and corporate characteristics. In this paper, based on the existing literature, the classical model of capital structure f actors has been improved in order to overcome the endogeneity problem inherent model, and the improvement also increase the explanatory power of the model, Then I segment and group the initial sample, and lead to further regression testing after treatment the samples, in order to conduct a study of the impact of the peer firms within industry on the capital structure, the conclusions is following:(1) the capital structure of listed companies affected by their peer firms' behavior and characteristics of thi s industry;(2) compared to the peer companies' characteristics, the impact of peer firms' financial behavior within the industry to capital institutions is much greater;(3) the capital structure of listed companies exist following the leader effect, that within the industry the smaller, less profitable companies will follow the leaders' capital structure decisions within the industry.