The Effect Of Income Tax On The Company's Capital Structure

The development of the enterprise,set up to grow,need strong capital as a powerful backing,enterprise funds for enterprises,as an important blood to the body,enough funds can effectively guarantee the sustainable development of enterprises and effective management.Therefore,in the development and operation of enterprises,raising funds has become a very important thing to be faced with.As a key financial management of a company in the enterprise financing activities section,not only can guarantee the safety of the enterprise funds,at the same time,the company's operating efficiency,the company's governance structure to a certain extent,also have a certain impact,plays an important role in the development of enterprises.The study of tax and capital structure came from scholars Miller(1958)and Modigliani at first.After that,the western academic circles analyzed and studied the capital structure from the perspective of taxation.Modern capital structure theory puts forward:in the related factors of enterprise capital structure,one of the most critical and direct factors is tax revenue.Tax can affect the financing of enterprises because of the non neutrality of tax revenue.From the enterprise income tax,corporate debt financing,which should pay the interest,as required for the company's operation cost,can be in the pre tax deduction,so no debt management companies can pay less income tax,tax is equal to the corresponding gain benefits.As for debt financing of the company,and can not get the benefit of tax,so it can be said that the tax,the equality between the creditors and shareholders of the enterprise business has been broken,relative to creditors is more preferential treatment,for shareholders is the "discrimination".Based on the personal income tax perspective,because of the personal income tax levied by the government,whether it is business or interest paid to creditors,enterprises dividend paid to shareholders,creditors and shareholders from the government will be in the collection of personal income tax,so whether the enterprise paid to the creditor's interest,or the enterprise paid to shareholders the actual income is not a dividend,shareholders and creditors,if the tax on interest income between tax and dividend income tax is different,so when the company's creditors and shareholders in the assessment of enterprise value,there will be different,both will require companies to pay is not the same as the rate of return,the company stock in the implementation of debt financing and when the financing costs will be different.A large number of theoretical and empirical studies have proved that taxation really affects the capital structure of an enterprise.But this is not the case in our country.Domestic firms do not pay much attention to the choice of capital structure.Moreover,the pecking order theory,which has been tested by western developed countries,is not reflected in our country.What is the pecking order theory:enterprises in financing,the highest priority is to choose internal financing,internal financing can not be achieved if the financing requirements,so in the choice of external financing,debt financing is the first choice,and the financing is of low risk bonds were issued,or of convertible bonds issue.But when our company carries on the fund raising,it has not according to the pecking order financing theory,but reflects the distinct Chinese characteristic.The most important thing is to choose the external financing,especially the choice of equity financing.Few companies choose to finance the financing of foreign companies.Since in theory,the implementation of different financing methods to obtain the corresponding preferential tax,however,China's Listed Companies in financing,why the tax factors do not pay attention to,whether the tax factors for enterprises can be the choice of the financing way and play a guiding role,in order to better answer to the above question,therefore the effect of tax factors on the capital structure of enterprises need to analyze and study the necessary.In order to domestic capital structure and enterprises of western countries were explained,the tax is based on the perspective of the combination of theory and practice,try to western theory,starting from the current tax system of our country,the construction model of empirical analysis on the impact of tax on the capital structure of Listed Companies in China,so as to establish and perfect the government the related tax policy,provide a reference.This topic first expounds the main content of capital structure,then analyzes the related factors of capital structure deeply,then the theoretical basis of the influence of tax structure on capital structure.The part of empirical analysis,I select 412 listed companies in Shenzhen main board market from 2016 to 2008 for nine consecutive years to disclose the annual report as the research sample of this paper,through the construction of the regression model,the capital structure of listed companies affected by the income tax for the demonstration.Through the study,the actual income tax rate and the asset liability ratio is positively correlated,but the degree of influence is small,the impact of China's listed companies capital structure by the tax on the whole is not,resulting in debt financing is not enough power.We see that the current tax system of our country,did not play a supporting role in the implementation of debt financing of listed companies,it can be said that,because of the tax system,resulting in the preferred equity financing of Chinese listed companies.Analysis of the preferential tax policy is not standardized,the capital gains tax policy is not refined,the interest tax policy is lack of pertinence,lack of corporate debt tax incentive mechanism,interest,dividend policy is lack of system of current income tax policy highlights.