Research On The Cash Holdings And The Dynamic Adjustment Of Capital Structure Of Listed Companies

Based on the listed companies of Shanghai and Shenzhen A-share from 2000 to 2014, this paper studies the following questions though establishing the dynamic capital structure adjust model: First, explore the factors that affect the optimal capital structure of listed companies. Second, estimate the adjustment speed of capital structure of listed companies. Last, explore the impact of cash holdings to the speed of capital structure. The results show:(1) company size, tangible assets, the median have a significant positive relationship with the optimal capital structure, while the profitability, non-debt tax shield, growth have a significant negative relationship with the optimal capital structure.(2) The speed of capital structure of listed companies is 36.9%, and the speeds of over-indebtedness and inadequate groups are 67.3% and 32.6%, and the speeds of state-owned enterprises and non-state enterprises are 32.8% and 39.2%.(3) The higher level of cash holdings, the greater changes of cash holdings, and the speed of capital structure is faster. Meanwhile, the different levels of debt and property of listed companies also significantly affect the relationship between cash holdings and capital structure speed.The contributions of this paper are as follows:First, this paper establishes the dynamic capital structure adjustment model which contains cash holdings based on the normal capital structure adjustment model, and introduces the basic of dividing into different groups under different debt level and properties. Second, this paper estimates the adjustment speed of capital structure under different levels of debt and properties which are different from the previous studies. Last, this paper explores the effect which cash holdings and its change impose on the adjustment speed of capital structure. In this study, we found that cash holdings have a significant impact on the capital structure adjustment speed, which riches the dynamic adjustment of capital structure research field.