Research On Dynamic Adjustment Of Capital Structure From The Perspective Of Life Cycle

Since Modigliani and Miller put forward MM theory in 1958,many scholars have done a lot of research on capital structure and expounded the factors that can affect capital structure from many aspects.The capital sources of enterprises in different life cycle stages are composed of different proportion of shareholders' investment and loans from financial institutions and non-financial institutions,that is,different proportion of equity financing and debt financing.Because of different financing methods in different life cycle stages,there are great differences in capital cost,financial risk and enterprise value in different life cycle stages.It is very important for enterprises to formulate financing strategies for their business activities.The funds obtained from financing activities and business activities will also affect the investment activities of enterprises.Scientific and reasonable financing strategies can improve the market competitiveness of enterprises and contribute to the long-term development of enterprises.How to formulate a scientific and rational financing strategy and form the optimal capital structure has always been the focus of enterprise managers and experts at home and abroad.Enterprises have been in a changeable economic environment for a long time,and their capital structure is always in a dynamic change because of the different sources of capital.If we only study the capital structure from a static point of view,it will be out of touch with the real environment in which the enterprise is located.In the process of dynamic capital structure research,many scholars use the partial adjustment model of capital structure,select macroeconomic environment and company characteristics and other variables to fit the target capital structure.However,due to the existence of fixed costs and institutional costs,enterprises will make partial adjustment of capital structure after comparing adjusting benefits and adjusting costs,resulting in enterprises can not achieve their objectives capital structure immediately.According to the theory of enterprise life cycle,all enterprises will go through the four life cycle stages of start-up,growth,maturity and recession,even though their own operating conditions and economic environment are different.Because China's current capital market is not too complex and bank lending is the main financing option and highly centralized ownership,it is particularly important to combine the life cycle theory with the dynamic capital structure research from the theoretical and practical point of view.Up to now,few domestic and foreign scholars have studied the combination of enterprise life cycle and dynamic adjustment of capital structure.Therefore,the study on the combination of target capital structure,adjustment speed,adjustment path and adjusted effect under different life cycles of enterprises can enrich the research on the combination of life cycle theory and dynamic capital structure theory to a certain extent.Based on the dynamic adjustment of capital structure from the perspective of life cycle,this paper takes Changjiang Electronics Technology as an example to study the dynamic adjustment of capital structure in different life cycle stages,and elaborates the process of dynamic adjustment of capitalstructure in different life cycle stages and the results after adjustment,which can be used for other listed companies.How to adjust the capital structure dynamically in different life cycle stages can bring reference value.On the other hand,it can also promote the company to optimize the capital structure rationally in different life cycle stages.At present,Changjiang Electronics Technology is the third largest sealing and testing enterprise in the world.Its development not only has great significance for itself,but also has great significance for the global development and reputation of China's computer,communication and other electronic equipment manufacturing industry to a certain extent.The purpose of this paper is to provide case enlightenment and reference value for China's computer,communication and other electronic equipment manufacturing enterprises on how to dynamically adjust capital structure in different life cycles by studying how to dynamically adjust capital structure in different life cycles of Changjiang Electronics Technology and what effect it will achieve after the dynamic adjustment of capital structure.This paper uses normative research method and empirical and case analysis method to study specific cases.In normative research method,firstly,literature research method is used to show the content of the study clearly after combing the relevant literature in three aspects:life cycle,dynamic adjustment of capital structure and dynamic adjustment of capital structure based on the perspective of life cycle.In the empirical and case analysis,taking Changjiang Electronics Technology Company as the research object,this paper studies the dynamic adjustment process and results of capital structure at different stages of its life cycle,and obtains corresponding experience and enlightenment.This paper fits the target capital structure and the adjustment speed of capital structure through the model,and studies the changes of the five adjustment paths of capital structure,and divides the life cycle stage of enterprises,and studies the combination of life cycle and dynamic adjustment of capital structure.This paper draws the following two conclusions: Firstly,whether it is the actual capital structure or the target capital structure,the asset-liability ratio in the growth period is higher than the asset-liability ratio in the mature period;secondly,the adjustment speed of the capital structure in the mature period is the fastest,followed by the growth period.Among the fast developing industries in our country,the manufacturing of computer,communication and other electronic equipment is a top priority.Research on dynamic adjustment of capital structure in different life cycles of Changjiang Electronics Technology can bring certain reference value to other similar industries,thus promoting China's computer,communication and other electronic equipment manufacturing companies to accelerate the pace of dynamic adjustment of capital structure according to different life cycles.