Research On The Impact Of Equity Incentive And Product Market Competition On Capital Structure Dynamic Adjustment

The capital structure decision-making is the core content of enterprise investment and financing decision,which is about the sustainable and healthy development of the enterprise.With the rise of the dynamic capital structure theory and the development of econometrics in dynamic panel data processing,the research on the dynamic adjustment of capital structure has become a focus in the field of capital structure.Research on capital structure dynamic adjustment is mostly around the factors such as company characteristics,macroeconomic and institutional environment,but less involves in corporate governance.This paper argues that managers is the main body of enterprise financing decisions,whose decision-making effectiveness is related to their work enthusiasm to a great extent.Therefore,equity incentive has a long-term incentive effects,which is the important way to relieve the principal-agent problems,and also can produce important influence on dynamic adjustment of capital structure.In addition,according to the beyond property-right theory,product market competition is an important corporate external governance mechanism,which is the basic power to improve the enterprise value and has the multiplier effect on the equity incentive.When it is specific to the capital structure adjustment,product market competition will inevitably have effects on the relationship between the equity incentive and capital structure adjustment.In view of this,the paper respectively discusses the impacts of equity incentive,product market competition and the interaction between them on the speed and effctiveness of capital structure adjustment,which is to explore the relationship between product market competition and equity incentive,enrich the research contents in the field of capital structure dynamic adjustment,improve the ideas of capital structure optimization of enterprises,and hope to be able to provide certain guiding significance to the design of equity incentive plan of the enterprise.First of all,with a review of the existing literature,this paper presents the relations between equity incentive,product market competition and capital structure dynamic adjustment.Secondly,this paper systematically summarizes the related theoretical basis,and combined with the capital structure and product market competition situation of listed companies which have been implemented equity incentive,and proposes its research hypothesis.Thirdly,this paper builds a multiple regression model which is included the variables of equity incentive and product market competition.Then,according to the data of 2006 to 2016 in Shanghai and Shenzhen A-share listed companies which have been the implementation of equity incentive plan,this paper empirically analyzes the impact of equity incentive and product market competition on capital structure adjustment speed and capital structure deviation degree.And it is added interaction term of product market competition and equity incentive,to inspect the effect of product market competition on the relations between equity incentive and capital structure dynamic adjustment.Finally,this paper summarizes the empirical test results,and proposes the suggestions.By empirical test,the research's conclusions mainly include the following four aspects:(1)The implementation of equity incentive of listed companies have a relatively rational consciousness of target capital structure and tend to maintain a target capital structure.(2)The implementation of equity incentive of listed companies will significantly speed up the capital structure adjustment,and narrow the distance of company's actual capital structure and the target capital structure.Equity incentive and the speed or the effect of capital structure adjustment is positively correlated.(3)Product market competition have a negative impact on the speed of capital structure adjustment.But it is not significant in the relationship between product market competition and capital structure deviation degree.(4)Both in terms of capital structure adjustment speed and in terms of capital structure adjustment effect,product market competition enhances the relationship between equity incentive and capital structure adjustment.This means that there is the complementary effect between equity incentive and product market competition,and product market competition can enhance the effect of equity incentive.