Research On Dynamic Adjustment Of Capital Structure Of Listed Companies In China-Based On The Deleveraging Background

As the economic development slows down,China's economy has entered a stage called “new normal”.At the same time,economic policy in China has also changed from an extensive,quantitative,and expansionary style,which places priority to GDP growth and scale growth,to an intensive and quality style which pursues economic quality and capital efficiency.During this process,the excessive leverage ratio of non-financial enterprises has become increasingly prominent.Hence,the deleveraging of overall economic and the improving the efficiency of corporate capital allocation have become an urgent task.Confronted with this phenomenon,China proposed a supply-side structural reform in December 2015,and deleveraging has become a crucial part of China's economic reforms which has achieved very significant results.However,a large number of researches indicate that many small and medium-sized enterprises and private enterprises in China are unable to obtain sustained and rapid development due to the lack of effective financial support.The coexistence of achievements and problems fully illustrates the structural contradictions of China's economic development.This kind of contradiction requires policy makers not only to consider the macro characteristics of the Chinese economy,but also to pay attention to the characteristics of enterprises in the process of deleveraging the real economy.Meanwhile,it is also necessary for policy makers to figure out the factors which affect the liabilities of Chinese enterprises according to the actual situation of the enterprise,and therefore to distinguish which liabilities are in line with the basic principles of the enterprise,and which invalid liabilities do not meet the basic principles of the enterprise.Before discussing whether the capital structure is in line with economic fundamentals,we first need to determine which factors influence the capital structure of listed companies in China.Apparently,previous research has been constrained by assumptions and data differences,which leads to different results.Based on a systematic review of the capital structure theory and previous studies pertaining to this topic,this paper makes a comprehensive analysis and discussion on the influencing factors of the dynamic capital structure of Chinese enterprises by using the data of Chinese listed companies in 2009-2018.After that,fixed-effect analysis and segmentation data regression are applied to classify and discuss the differences in capital structure of different ownership systems,different industries and regions in China.In order to enhance the stability of the results,this paper,on the one hand,adds the regional financial factors in the influencing factors of regression analysis,which aims to reduce the impact of macro factors on the capital structure of enterprises;on the other hand,this paper narrows the time span of data selection,i.e.using data from 2013 to 2018,which helps to avoid the effects of extreme values,and therefore to ensure a stable and convincing result.The empirical results of this paper mainly draw the following conclusions.Firstly,the capital structure of Chinese enterprises basically conforms to the logic of trade-off theory.To be more concrete,company scale,tangible assets,income tax rate,growth and etc.are positively related to the company's capital structure,while business risk,non-debt tax shield,profitability are negatively correlated to capital structure.Secondly,among the different ownership enterprises,the asset-liability ratio of state-owned enterprises is significantly higher than that of other ownership enterprises.In the meantime,when it comes to the determinants of asset-liability ratio,there still exist some factors that cannot be explained by the enterprise level.Additionally,the relationship between capital structure and corporate characteristics of private listed companies in China is closer to Western theories,and its capital structure is dynamically adjusted at a faster rate.Thirdly,the regression analysis of panel data demonstrates that there are regional differences in the capital structure of Chinese enterprises.Due to the differences in economic environment between the eastern and western regions,the eastern region has a lower asset-liability ratio and higher capital adjustment rate than the non-eastern region,and company's characteristics can explain the capital structure well.This further verifies the regional differences in the capital structure of Chinese enterprises.Lastly,the results of regression analysis by industry suggests that there is also a difference in the speed of capital structure adjustment between monopoly industries and competitive industries.Owing to severe competition,the capital structure of competitive industries is more in line with economic fundamentals,and adjustment can be made more quickly in the face of changes in corporate characteristics.In a nutshell,this thesis reveals the structural characteristics of China's economy.Via statistical and regression analyses,this thesis also figures out that there exists ownership,industrial and regional differences when it comes to the high leverage of non-financial enterprises in China.Faced with this phenomenon,we believe that the deleveraging of the corporate does not mean all companies require deleveraging.The main focus of de-leverage should be placed on state-owned enterprises,monopolistic enterprises and non-eastern enterprises.Moreover,whether a company is in need of deleveraging can never be decided by one factor.The key to deleveraging is to deleverage those high-risk companies whose debt levels do not meet economic fundamentals and are seriously out of reasonable range.Last but not the least,in the choice of deleveraging tools,not only do companies need to replenish stock liabilities with stock assets,we also need to guide those companies with development potential but high leverage to develop other financial instruments,including market-oriented debt-to-equity swap,multi-channels to supplement corporate capital,introduction of high-quality strategic investors,revitalizing existing assets,optimizing corporate debt structure and etc.