Expected Inflation And Firms’ Assets Structure

In order to exploit the impact of expected inflation on the asset structure ofcorporate. Due to changes in macroeconomic necessarily reflect on the microscopicbehavior of the individual, in-depth study of micro-enterprises will help us to betterunderstand the effects of inflation, also to help businesses operators to better respondto fluctuations in inflation. This paper use the asset structure as a starting point tostudy fluctuation of expected inflation which affecting the microstructure of theenterprises’ behavior. In this paper, empirical research and normative researchcombined, we emphasis on empirical research methods and analysis. Research resultssuggest that when we expect high inflation, we tend to hold more operating assets andless financial assets. In contrast, if we expect low inflation, we tend to hold lessoperating assets and more financial assets. Non-state-owned enterprises reflect moreclearly on expected inflation, which reflected in changing of financial assets. Thecompany who initiative to adjust the asset structure will have better performance infuture (The initiative is to increase the operating assets). When we expected inflationrate is higher, non-financial constraint companies will have higher level of financialassets than financial constraint companies. Expected inflation and capital structureeffect asset structure. There is a complementarity between expected inflation and assetstructure. Expected inflation and corporate earnings ability combined effect of theasset structure, so there is alternative relationship between expected inflation andcorporate profitability. We have endogenous test between expected inflation andassets structure. This study attempts to put the expected inflation and asset structureinto macroeconomic and the behavior of micro-enterprises framework, not onlydominancing the impact of corporate’ behavior of inflation, but also expanding theresearch of enterprise asset restructure. Thus for the enterprise operators to better copewith the impact of inflation volatility, improving business performance and evenimproving the balance sheet provide a useful reference.