Management Equity Incentive,Institutional Investors And Capital Structure Dynamic Adjustment

Capital structure is the capital combination of equity and debt caused by corporate financing.As an important financial decision,capital structure decision is closely related to the improvement of corporate value.But,at present,our country universal existence unreasonable capital structure of listed companies.The reasonable capital structure can effectively reduce the enterprise cost of capital and make enterprise to get sustainable development.High debt ratio is easy to cause the company to operate the crisis and exacerbate the company's financial difficulties.Low debt ratio means that the company does not make full use of tax shields earnings,but also causes the problem of free cash flow.Therefore,the research on capital structure has been widely concerned by theoretical and practical circles for a long time.At present,the study of capital structure theory has developed from the static level to the dynamic level,and the spring up of dynamic capital structure theory has made research on the field of capital structure dynamic adjustment the focus.The theory of dynamic capital structure believes that the company always has an optimal target capital structure and will change constantly.Due to the complex and ever-changing factors of the company's internal and external factors,the company's capital structure will inevitably deviate from its target capital.The company that aims to maximize its value can adjust its capital structure through financing decisions to bring it closer to the target capital structure.Throughout the current literature is not difficult to find,a large number of scholars have studied the dynamic adjustment of capital structure from the perspectives of institutional background,macroeconomic environment,and company characteristics.Fewer scholars have studied dynamic adjustment of capital structure from the perspective of management equity incentives and institutional investors,and no scholars have studied the impact of different equity incentive models on the relationship between equity incentives and dynamic adjustment of capital structure,as well as the interaction between management equity incentives and institutional investors about dynamic adjustment of capital structure.In order to make up for the shortcomings of the existing research,enrich the relevant theories,and provide suggestions and basis for the company to set the target capital structure and optimize capital structure,this paper adopts a research method combining normative research and empirical research,and selects the Shanghai's and Shenzhen's A-shares of listed companies with equity incentives in 2008-2017 as a research sample.This paper empirically tests the relationship between management equity incentive,institutional investors and capital structure's dynamic adjustment including speed and effect,and empirically tests the interaction of two factors on capital structure's dynamic adjustment.This paper further studies the impact of different equity incentive models on the relationship between management equity incentives and capital structure dynamic adjustment is further studied.The empirical results of this paper show that:(1)With the increase of the intensity of the management equity incentive,the dynamic adjustment speed of the capital structure is significantly accelerated,and the adjustment effect is significantly improved.This indicates that with the increase of the intensity of management equity incentive,equity incentive has played a greater role in promoting the capital structure optimization.(2)The equity incentive effect of restricted stock is better than that of stock option,both in terms of the speed of capital structure adjustment and adjustment effects.(3)The increase of institutional investors holding can speed up the dynamic adjustment of capital structure,indicating that institutional investors have the ability and motivation to participate in corporate governance and promote the speed of capital structure's dynamic adjustment.However,the impact on adjustment effect is not significant.It may be due to selection of proxy variables,differences in setting target capital structure by different entities,differences in investment objectives,diversified investments and the influence of the governance environment.(4)Institutional investors' shareholding can promote the positive effect of management equity incentives on the dynamic adjustment of capital structure,indicating that institutional investors play a role in governance,supervise and restrain management's decision-making behavior,and have a positive impact on the role of equity incentives,then speed up dynamic adjustment of capital structure.But,the result is not significant in terms of adjustment effect.Finally,based on the conclusions of this paper,four suggestions are proposed: establishing the awareness of target capital structure and setting the scientific target capital structure;improving the corporate governance mechanism,improving the corporate governance level,and creating a good internal governance environment;expanding the implementation scope of the management's equity incentive,taking the issue of capital structure optimization and value enhancement into the equity incentive contract;improving the professional level of employees among institutional investors and improving the ways for institutional investors to participate in corporate governance.