Large Shareholder Control,Equity Balance And Capital Structure Adjustment

The reform of shareholder structure fell to the ground in 2006 which makes the non-tradable shares with different rights succeed in trading by recalculating the holding costs.Thus,the concentration ratio of state-owned companies has decreased,while appropriate balances of outside shareholders and diversification of ownership structure has increased,even the share selling of the major shareholders at this stage is also involved.Also as a crucial measure of the reform of state-owned enterprises,the SASAC stated to encourage private capital to participate in assets reorganization of state-owned enterprises in 2014,further promoting the reform of ownership structure's diversification.Until now,although controlling shareholders still occupy an absolute advantage in decision making,the second largest shareholder were seen more frequently in the control competition,and whether the mixed ownership had improved the efficiency of corporate governance has drawn more attention.Ownership structure is the foundation of corporate governance,not only determines the internal decision-making efficiency,but also affects the necessary return rate of external investors and creditors and the financing cost of itself.Studies have found that financing decisions under the control of controlling shareholders are affected by "tunneling effect" and"alignment effect".On one hand,in order to avoid constraint from debt,controlling shareholders prefer equity financing.On the other,the non-dilution effect of debt,however,makes controlling shareholders use debt financing when faced with control competition.Therefore,the study of the relationship between ownership structure and capital structure has been the hotspot in the field of corporate governance,scholars like van Binsbergen et al.(2011)and Morellec et al.(2012)further studied capital structure decision from the perspective of agency problems which have provided references for our study.The content of this paper is the impacrt of large shareholder control and equity balancce on dynamic adjustment of capital structure.We firstly analyze the target capital structure through the tradeoff and agency theory,and examine the effect of large shareholder control and equity balance on the role of corporate governance,then use non-financial listed companies' data to test the influence.Secondly,we think of agency cost as an important part of the cost of capital structure adjustment.According to the governance effect,debt is a kind of income for upward capital structure adjustment while is a kind of opportunity cost for downward capital structure adjustment,and we research asymmetric impact of large shareholder control and equity balance on capital structure adjustment in companies with lack of debt or excessive debt.Finally,we examine the particularity of the proportion of agency cost in capital structure adjustment's total cost and debt governance effects in state-owned companies and companies with funding gap or only one big share to demonstrate the validity of the agency theory and the differences on company level when applied in the capital structure adjustment.The research significance of this paper are:(1)examining the influence of large shareholder control and equity balance on corporate governance,and verify the applicability of the tradeoff theory combined with the agency and capital structure decision-making problem in Chinese listed companies;(2)verifying the importance of agency costs in the cost of capital structure adjustment,refining agent cost mechanism study of the impact on capital structure adjustment speed,and to form a beneficial supplement for existing capital structure theory;(3)beneficial for the optimization of corporate financing behavior and the improvement of corporate governance,and to provide theoretical and empirical experience to support the policy involved.