Capital Structure Fluctuation And Equity Agency Costs

The equity agency cost caused by the separation between the right to control and the right to operate, is an important problem in the study of corporate governance, that how to reduce it is always the center of research. The capital structure has a tight relationship with the control right of corporate funds because of the different capital combination, also impacts the company governance structure. Therefore, how to reduce the equity agency costs from the perspective of the capital structure becomes an important research direction. The capital structure fluctuation will seriously affect the equity agency cost, about how to affects it, there is no research.In this paper, we will discuss the effect of capital structure fluctuation impact on the equity agency cost. This paper respectively analyzed the influence factors of the capital structure fluctuation and the equity agency cost, and the reasons of capital structure fluctuation in theory, then put forward the hypothesis that the capital structure fluctuation will make the equity agency cost increasing, and from two aspects of monetary policy and equity nature, to discuss the effect that the capital structure fluctuation of Chinese listed companies on equity agency cost. Then build a model, using the 2003-2014 data of A-share listed companies in China, study the effect of capital structure fluctuation on equity agency cost.Through the theoretical analysis and the empirical test, this paper concluded the following main conclusions:The equity agency costs have increased as the capital structure fluctuations make the information more asymmetry; And under the easing of monetary policy, the more promoting function of the capital structure fluctuations on the of equity agency costs than tightening of monetary policy; To the different nature enterprise, the effect of the capital structure fluctuation on the equity agency cost is not the same. May be due to the soft budget constraint problems of state-owned enterprises, the enthusiasm of manager for capital structure fluctuation is less than non-state-owned enterprises.Although the improvement of capital structure is the key to the corporate governance, but the control of the range of the capital structure fluctuation also plays a very important role on corporate equity agency cost. From this paper, we have the following several suggests: First, according to different conditions of enterprises implement the corresponding policies to encourage. Second, the enterprise should formulate the reasonable development strategy, to grasp the optimal capital structure, reasonable arrangement of the proportion of debt capital. To control the equity agency cost, the enterprise when carries on the financing decision to choose according to oneself circumstance and the demand. Third, the state-owned enterprises should improve the management system; fully take advantage of the financing channels, to ensure the capital structure stability. And non-state enterprises should make full use of its own funds, diversified development, to control the range of fluctuations in the capital structure.