The Empirical Researches On The Factors Affecting The Stability Of Capital Structure Of Listed Firms In China And The United States

Because capital structure plays a pivotal role in the development of a firm,it has become one of the most popular topics among scholars who study corporate finance since 1950s.However,most of previous researches focus on the level of capital structure while rarely care about its volatility.Although there are more discussions on the theory of adjustment of capital structure in recent years,they are still talking about the level while neglecting the variation.Moreover,the stability of capital structure is in dispute.Therefore,this paper is developed from the view of the stability of capital structure,and discusses the effect of different factors on the volatility of capital structure.The subject is the factors which affect the volatility of capital structure both in China and the United States,and this paper examines the correlation of the volatility with 11 micro factors.And the volatility is explicitly defined in this paper.However,different from previous researches which define absolute standard to judge whether the capital structure is stable,this article adopts the standard derivation of leverage in a certain horizon as the index to indicate the degree of variation of capital structure.This index does indicate not whether the capital structure of a firm is stable,but whether the capital structure is more stable than before or comparing with others'.Meanwhile,according to the comparison of the mechanism different factors affecting the volatility of leverage in China and the United States,this paper discusses different effects of elements on the variation of capital structure.Besides,this paper also probes into whether lagged micro factors affect capital structure in both countries.As a result,lagged factors affect the stability of capital structure the same as non-lagged factors,and it means that the empirical test in this paper is robust.Unbalanced panel data are empirically examined in this paper,and the result illustrates that the variation of capital structure is affected by not macro but micro factors.Aside from this,in a longer horizon,the R2 value of regression is higher,and it means that the regression equation is more reasonable in the long run.Moreover,the effect of different factors in one horizon is different while the effect of one factor in different horizons is also different.For instance,size,tangibility ratio and profitability prohibit the volatility of book leverage while capital expenditure enhances the volatility of book leverage in both China and the United States.However,growth and change of debt ratio can enhance book leverage variation in United States while prohibit book leverage variation in China;and dividend ration and financing deficit enhance book leverage stability in United States while prohibit book leverage stability in China,At last,this paper asserts that the effect of one micro factor in China differs from that in the United States,and the changing method as the change of horizons is also different in different countries,though nearly all of the micro elements matter in both countries.Because previous researches focused on the stability of capital structure scarcely while those scholars cared more about the stability itself,it is innovative that this article discusses factors which affect the stability of capital structure.From the view of factors which influence the level and adjustment of capital structure,this article studies these factors' effect on the stability of capital structure,and this is a fundamental study.Because there are many other elements can affect capital structure,this field is far from being explored completely.