The Dynamic Adjustment Of Capital Structure Based On The Market Timing Theory

The development of the economy depends on the development of the enterprise.Enterprises have made great contributions to the development of the economy.The realization of enterprise value is linked to its capital structure.Capital structure is also the basis for corporate managers to make decisions and make decisions.Therefore,in the context of China's market economy,it is particularly important to study the capital structure of enterprises.The theory of capital structure can be traced back to the 1958 MM theory.Since then,many scholars have studied the theory of capital structure unprecedentedly,and a large number of capital structure theories came into being.In recent years,because dynamic capital structure is more consistent with reality,it can provide a basis for enterprise decision making,and its research is more important.At present,the ratio of assets and liabilities in China is generally high,and the irrational capital structure will hinder the development of our enterprises.Finally,it hinders our country's economic development.In order to promote the development of our country's economy and make our country a big country in the world,it is necessary to adjust the capital structure of our enterprises.Looking at the literature at home and abroad,the research on the dynamic adjustment of capital structure is mainly focused on the influence factors of capital structure.The perspective of the study includes the macroeconomic environment,the national tax policy,the degree of marketization and so on.Few scholars study from the perspective of market timing.The study of market timing is also limited to the applicability of the market timing theory.Therefore,based on the market timing theory,this paper studies the dynamic adjustment of capital structure on the basis of market timing theory in China.This paper selects data from listed companies from 2012 to 2016.Taking stock turnover as a measure of market timing,this paper studies the relationship between market timing and dynamic adjustment of capital structure.In order to further study whether managers will have an impact on the relationship between them,this paper adds managers' risk preference factors.Finally,the following conclusions are drawn.First,the timing of market timing has a positive impact on the speed of capital structure adjustment.When the stock price is overestimated,the speed of capital structure adjustment is higher than that of stock price underestimation.Second,the timing of market timing is negatively related to the adjustment effect of capital structure.Compared with underestimation of stock price and overestimation of stock price,the degree of capital structure deviating from target capital structure is lower.Third,the higher the turnover rate of stock is,the more likely managers are to choose exogenous financing.Fourth,the higher the risk aversion is,the higher the risk preference of risk averse,the greater the market timing factors have on the dynamic adjustment of capital structure.But specifically,overestimation of stock price and underestimation of stock price have no obvious influence on market timing factors and dynamic adjustment of capital structure.Finally,based on the results of empirical research,this paper gives relevant policy recommendations.