Study On The Mechanism Of Impact Of Accounting Standards Evolution On Adjustment Of Companies’ Capital Structure

Researching the impact of institutional factors on the capital structure is a new direction of capital structure theory research.Accounting standards are not only the rule to regulate the accounting behavior of the micro subjects,but also plays a very important role in the corporate governance,the allocation of resources and the macroeconomic operation.The dynamic adjustment of capital structure of the company is essentially the process of optimizing the allocation of the source of funds according to the changes of the environment,and accounting standards have gone through several major changes in China,so how does the accounting standards evolution affect the dynamic adjustment of the company’s capital structure?And to what extent is this influnce?Theorists and practitioners have not done systematic research on these problems.So this paper studies the mechanism of impact of accounting standards evolution on adjustment of capital structure to reveal the connotation of accounting standards behind the adjustment of capital structure and to provide theoretical basis and empirical evidence for the further revision of relevant policies for accounting standard-setting body.Based on the information asymmetry theory and the principal-agent theory,starting from the relationship between accounting system、accounting information and corporate financing behavior,we researched on how the accounting system relate to capital structure.Then based on the theory of institutional change and the theory of dynamic adjustment of capital structure,we analyzed the mechanism of how accounting standards evolution affect dynamic adjustment of corporate capital structure from two aspects of adjustment speed and mode and the mediating effect of financial costs.At last,we maked the empirical test using 110 listed companies’ balance panel data from the second to the fourth stage(1998-2014)of China’s accounting standards evolution as samples to empirically test the following questions:First,how does the accounting standards evolution affect the dynamic adjustment speed of capital structure?Does the path dependence of accounting standards evolution embody?Is there any difference in the effect of accounting standards evolution on the adjustment speed of capital structure in different adjustment directions?Second,how does the accounting standards evolution influence the dynamic adjustment mode of capital structure?Under the different adjustment direction,whether the accounting standards evolution has a significant impact on all adjustment modes?Third,whether the financing cost plays an intermediary role between the accounting standards evolution and the dynamic adjustment of capital structure?The main results are as follows:(1)Clarify the basic relationship between the capital structure and the company’s accounting system,and analyzed mechanism of how accounting standards evolution affect adjustment of corporate capital structure from two aspects of adjustment speed and mode using financing costs as the intermediary.Accounting system associated with capital structure through accounting information,and then through the financing cost.Financing cost decides the company’s external financing constraints,and thus has influence on the ability for the company to adjust its capital structure rapidly according to the target capital structure.So in different stages of the accounting standards evolution,the change of the financing cost caused by the change of the accounting information quality will lead to the difference of the capital structure adjustment speed.The path dependence of the accounting standards evolution will hinder the rapid adjustment of the capital structure.The financing cost of different financing modes varies differently with the accounting standards evolution,so in different stages of accounting standards evolution,the company will choose different financing modes to complete the dynamic adjustment of capital structure.(2)Examines the impact of accounting standards evolution on the overall adjustment speed and the adjustment speed under different debt levels using the full sample and staged sample.First,as the changes of the accounting standards,there is a difference in the adjustment speed of capital structure and the adjustment speed will be more sensitive to the decline of accounting information quality.Second,from adjustment direction of the capital structure,accounting standards’ influence on the upward adjustment speed is greater than the effect on the downward adjustment speed,and this influence difference is more prominent in the stage of poorly accounting information quality.This showes that accounting standards’ influence on capital structure adjustment speed has heterogeneity under different debt levels.Third,the path dependence of the accounting standards evolution is also significantly affect the dynamic adjustment of capital structure and the company can only partially adjust its capital structure.(3)Examines the impact of accounting standards evolution on the adjustment modes of capital structure in different stages.First,the accounting standards has significant influnce on the likelihood of increasing equity financing way at the downward adjustment and increasing interest-bearing liabilities at the upward adjustment.In the stage of improved accounting information quality,the company is more likely to choose the equity financing way(increase equity financing)to adjust its capital structure downward,in the stage of declined accounting information quality,the company is more likely to choose debt financing way(increase interest-bearing liabilities)to adjust its capital structure upward.Second,reduce equity financing and interest-bearing liabilities are not effective path of capital structure adjustment,and the accounting standards has no significant influnce on the likelihood of choosing the two ways.(4)Examines the mediating effect of financing cost on the adjustment of capital structure.In the third and fourth stage,accounting standards evolution significantly affects the dynamic adjustment of capital structure,and it also significantly affects the equity financing and debt financing costs.When we put the financing costs into the inspection model of accounting standards evolution and the dynamic adjustment of capital structure,the influence is still significant,but the impact degree is reduced,so as to prove that the financial costs play a partial intermediary role.