Research On The Relationship Between The Specialty Of Assets And The Capital Structure Of Companies In The Pharmaceutical Industry

Capital structure plays an important role in the value of an enterprise. Because enterprises of different industries have different features and an enterprise exhibits different characteristics at different stages, an enterprise needs to develop a specific financing strategy according to its own characteristic. Traditional study on capital structure is based on the assumption that the asset is homogeneous and can be replaced by each other. However, with the development of science and technology, the enterprise is trying to explore new technology and products to obtain or maintain its advantage in the market and the asset can no longer meet the homogeneity assumption in the traditional theory. Therefore, to study capital structure from the perspective of asset specificity which is originated from transaction cost economics has great theoretical and practical significance. Through the analysis of extensive literature, the article finds out that academia has different opinions on the relationship between asset specificity and capital structure. Most scholars abroad believe the correlation is negative between the two. While half scholars at home think the correlation is positive between them.This paper makes an empirical study on the relationship between asset specificity and capital structure by selecting the financial data of listed companies in pharmaceutical industry between 2011 and 2013 as the sample. The proportion of long-term asset specificity, cost of sales rate, the rate of research and development costs are chosen as the index of asset specificity and asset size, profit ability, asset growth rate, financial expense ratio, liquidity ratio and tangible assets ratio are regarded as the control variables. The empirical study finds out that a negative correlation exists between asset specificity and capital structure. The result is consistent with the transaction cost economics conclusion. Besides, the result also reveals that the negative correlation between the proportion of long-term assets and corporate debt ratio is not obvious, which is exclusive in China.Finally, based on the theoretical and empirical analysis, the article puts up some suggestions. To achieve steady and fast development of the pharmaceutical industry and enhance its competence, the government should guide the enterprises to carry out specific asset investment and promote financial reform.