Research On The Factors Of The Adjustment Speed Of Capital Structure Under Different Adjustment Paths

Adjustment speed of capital structure has been a hot spot in the field of Dynamic Capital Structure Theory. The factors which influence adjustment speed have been paid more and more attention. Now competition in capital market is fierce, companies go out of business at every moment. To develop better, companies should know their own capital structure fully. At the same time, companies should know their ability to get equity financing and debt financing so that they can adjust capital structure to the best level as soon as possible.In order to further improve the flexibility of decision-making on adjustment of capital structure,help enterprises understand the difficulty in adjusting capital structure, enrich the research on the dynamic capital structure, the paper innovatively decomposes the traditional adjustment speed according to its adjustment paths, construct virtual capital structure under debt financing and equity financing. And analyze influence factors of adjustment speed under different paths.The paper is based on Dynamic Capital Structure Theory. It analyzes factors which influence adjustment speed under different adjustment paths. And it changes the traditional dynamic partial adjustment models into factor model under different paths. Then with the help of STATA and system GMM, we select data from 2005 to 2014 for 49 listed companies to analyze influencing factors of adjustment speed under equity financing and debt financing. In the end, the paper put forward policy recommendations.Main Conclusions for the paper are as following:(1) the way of OLS is appropriate to estimate target capital structure;(2) Deviation from target capital structure, the company’s growth, company size, profitability have significant impact on adjustment speed;(3) Macro factors which belong to common factors do not get identical results, which may be the result of less data;(4) Stock liquidity and agency problem in model of equity financing have significant effect while bond market development and the short-term debt paying ability in model of debt financing have significant effect.Based on these results, we raise the following policy suggestions:(1) improve the competitiveness of SMEs;(2) improve enterprises’ governance structure;(3) further improve stock market;(4) establish a sound corporate bond market;(5) select a reasonable way of financing.