Research On The Impact Of Life Cycle Of Listed Companies On Capital Structure

In recent years,with the steady progress of the supply-side structural reform policy of "three reductions,one reduction and one compensation",the "deleveraging" work in the financial sector has achieved remarkable results.Under this background,enterprises,especially private enterprises,are facing huge pressure of refinancing.There have been large-scale default events in China’s bond market.The default subject has spread from private enterprises to state-owned enterprises,and there is a trend of multi industry concentrated default.After in-depth analysis of the reasons behind this phenomenon,the most important thing is that the capital structure of relevant enterprise subjects is seriously unreasonable.Capital is an indispensable basic element in the production and operation activities of enterprises.An unreasonable capital structure will lead to increased financial risks,low efficiency of production and operation activities and thus affect the realization of enterprise value.Both financial theory researchers and entrepreneurs are very concerned about the capital structure of enterprises and are committed to finding the optimal capital structure to maximize enterprise value.However,as an objective economic entity,the enterprise is always in the process of dynamic change.There are great differences in the operational risks and financial characteristics at different stages of development,resulting in different capital results.If the life cycle stage of the enterprise is not distinguished in the process of analyzing its capital structure,then only a general representative value can be obtained.Therefore,it is of great theoretical and practical significance to introduce the dynamic perspective of life cycle into the analysis of enterprise capital structure,analyze the organic relationship between enterprise capital structure and life cycle stages,and investigate the dynamic evolution of capital structure.By combing the relevant literature and theories of capital structure and enterprise life cycle,this paper finds that scholars’ research on the interaction between enterprise life cycle and capital structure has confirmed that there are periodic differences in the capital structure of enterprises at different life cycle stages,but there is no consistent conclusion about the level of financial leverage at each cycle stage.In addition,relevant research shows that profitability is also an important factor affecting the capital structure.At present,most domestic and foreign studies on the dynamic perspective of capital structure do not consider the impact of the profitability of enterprises in different life cycle stages on the capital structure.Therefore,this paper uses the cash flow portfolio method to divide the life cycle stages of each sample company,and studies whether there are differences in the capital structure under different life cycle stages under the dynamic framework,taking into account the regulatory effect of profitability on the two.This paper selects the A-share listed companies in Shanghai and Shenzhen Stock Exchange from 2017 to 2021 as the research object.First,the cash flow portfolio method is used to determine the life cycle stage of the sample companies,and the difference of capital structure under different term conditions is investigated through descriptive statistical analysis,sub-parameter test and LSD test.The research found that,whether referring to the descriptive statistical results,non-parametric test results,or LSD test results,it can prove that the capital structure has significant differences in different life cycle stages,and the asset-liability ratio of listed companies in the growth period is higher than that in the mature period and recession period,and the life cycle distribution of the capital structure generally presents an inverted "U" pattern.Then this paper constructs a panel data multiple regression model,selects asset-liability ratio as the proxy variable of capital structure,and return on net assets as the proxy variable of profitability,discusses the impact of corporate life cycle,profitability and its combined effect on capital structure,dynamically examines the impact mechanism of profitability on capital structure under different terms,and deepens the understanding of theoretical circles on the decision-making mechanism of capital structure,It provides theoretical support for listed companies in different life cycles to make capital structure decisions.According to the panel model regression results,the capital structure of enterprises will change with the life cycle of enterprises,and the asset-liability ratio is positively correlated with the growth period and negatively correlated with the maturity period;In addition,the interaction coefficient between profitability and enterprise life cycle is significantly negative,indicating that profitability plays a negative regulatory effect between enterprise life cycle and capital structure.Specifically,when the enterprise is in the growth stage,the motivation of the enterprise to increase financial leverage will be weakened with the enhancement of profitability.When the enterprise is in the mature stage,the willingness of the enterprise to reduce financial leverage will increase with the enhancement of profitability,That is to say,the stronger the profitability of the enterprise,the lower the debt level.Finally,this paper further tests the above relationship from the ownership structure level,divides the sample into state-owned enterprise group and non-state-owned enterprise group,and explores the impact of enterprise life cycle on capital structure under different ownership.The study found that the asset-liability ratio of listed companies in the state-owned enterprise group is higher than that in the non-state-owned enterprise group at all stages of the life cycle,which is mainly caused by the dominant position of state-owned enterprises in the capital market financing process.Starting from the theory of capital structure and enterprise life cycle,this paper establishes the relationship between enterprise life cycle,profitability and capital structure through empirical research,further expands the research perspective of relevant topics,and provides some reference for the decision-making and optimization of capital structure of listed companies in China,and also provides relevant suggestions for the development of China’s capital market.