Research On The Impact Of Asset Specificity On Capital Structure

Managers make the capital structure decision based on the understanding of the nature of organization and transaction, so they need to know the features of corporate assets clearly, and have an insight into the relationship between capital structure and enterprise’s strategy and value, Transaction Cost Economics(TCE) considered the percentage of equity would increase with the improvement of asset specificity level, because equity financing can save the transaction cost. Companies have to establish corporate governance mechanism to ease the agency conflict under informational asymmetry. With the different level of corporate governance, the asset specificity has a varying impact on capital structure, this article researches capital structure deeply within the frame of the TCE and the Principal-Agent Theory, so we can investigate the relationship between asset specificity and capital structure on a practical business background.In view of the TCE and the Principal-Agent Theory, the author reasons two important hypotheses: Asset specificity and the debt ratio of capital structure are negatively related; corporate governance has positive moderating effect on the relationship between the asset specificity and capital structure. The author selects the financial statements of the high-tech listed companies in 2011-2014 as sample, and uses the empirical analysis method to explore the relationship between asset specificity and the moderating effect of corporate governance. The results show that the higher level of asset specificity in high-tech listed firms, the lower proportion of debt in capital structure; the ratio of the stock-holding of institutional investors has an positive moderating effect on the relationship between the asset specificity and capital structure while the state-owned shares and duality of COB and CEO have the negative results, senior management shareholding ratio’s moderating effect is not obvious. Finally, based on the above analysis, this paper suggests the high-tech companies should strengthen the assets specificity of information disclosure and improve the mechanism of corporate governance.