Study On The Impact Of Corporate Tax Burden On The Dynamic Adjustment Of Capital Structure

Capital structure has always been the core of corporate finance research,Modern capital structure studies began in 1958 with "capital cost,corporate finance and investment theory" written by Modigliani &Miller.Since then,the "MM theory" created by the two scholars and the later "modified MM theory" gradually prevailed.In nearly 60 years,many scholars in combination with the practical problems in market economy,had carried on a lot of valuable theoretical and empirical researches from various aspects to the capital structure,further deepened and developed the theory of capital structure.Theoretical research such as: financial contract theory,industrial organization theory,etc.Empirical research such as: dynamic adjustment of capital structure,research on enterprise income tax and capital structure,etc.In modern financial management,the maximization of shareholder's wealth or enterprise value is regarded as the main objective of the enterprise's production and operation.The capital structure theory holds that the capital structure achieves the best when the enterprise value reaches the maximum,and the enterprise weighted average capital cost is the lowest.Therefore,when discussing the operation of enterprises,it is bound to involve the three aspects of enterprise value,capital cost and capital structure.This article explores the enterprise tax burden and capital structure adjustment is also under the framework of the enterprise value maximization,to maximize enterprise value,namely control the optimal capital structure.As an important way to control cost,enterprise tax burden has great influence and significance in maintaining optimal capital structure and improving enterprise value.Since the reform of enterprise income tax in China in 2008,the income tax has been a hot topic in the micro field,and it has been regarded by foreign scholars as an important factor affecting the capital structure.However,in the study of tax burden and capital structure,most scholars only pay attention to enterprise income tax and ignore the influence of other taxes on capital structure,and also it studies the relationship between the two at the static level.On the basis of previous studies,this paper will expand the scope of research into other taxes including enterprise income tax.Considering the total tax burden of enterprises,using sample data of 1405 listed companies before 2009 from 2009 to 2015,the paper adopts the model of overall dynamic adjustment and the method of regression analysis for empirical research.The results show that: Corporate tax burden has a significant negative correlation with capital structure,and compared with the long-term liabilities,the adjustment of total liabilities is slower and the adjustment cost is higher.At the same time,other corporate governance variables have a significant impact on the capital structure: controlling interest,company size,tangible assets and agency cost are positively correlated with capital structure adjustment;however,the growth of the company,the liquidity of assets,the non-debt tax shield and earnings before interest and tax have a significant negative correlation with the capital structure adjustment.