A Research On Vatti's Capital Structure Based On Financial Contingency Theory

Private enterprises have an important economic position in our country,but for a long time,the voice of financing difficulties of private enterprises has been heard.Many scholars believe that financing difficulties and high financing costs cause a badly competitive environment for private enterprises and limit the development of private enterprises.However,towards the lower asset-liability ratio of private enterprises,academia attributes it to the fact that private enterprises have greater financing constraints so that they obtain credit funds difficultly.Another view is that private enterprises may reduce the asset-liability ratio to cope with industrial competition and gain competitive advantage because of the consideration of their own business development strategy.As a private enterprise,Vatti is in process of transformation and upgrading,resulting greater capital demand.Therefore,it is of practical significance to take Vatti as an example to analyse it's capital structure at the present stage.Financial contingency theory considers achieving sustainable development of enterprises as the ultimate goal of capital structure restructuring.This article takes it as precondition and takes Vatti as the research object.Firstly,it combs the relevant literature to understands the influence factors of capital structure and the main theory of capital structure through reading documentation.At the same time,it is found that the theory of financial contingency can well integrate all the capital structure theories,make an overall analysis of the capital structure,and sort out the relationship between the theory of financial contingency and the capital structure.Secondly,this paper uses the trend analysis method to analyze the current situation of its capital structure,and uses the comparative analysis method to compare the capital structure of Vatti with comparable companies in the same industry,and finds out the problems in the capital structure of Vatti.Then,this paper makes a correlation analysis of the capital structure of Vatti from four dimensions of the theory of financial contingency.The four dimensions of financial contingency theory are path dependence,external environment,internal factors and sustainable development.Finally,based on the analysis results of Chapter III and Chapter IV,this paper puts forward the capital structure adjustment plan and its implementation guarantee for Vatti.Specifically,through trend analysis and comparative analysis,this paper finds that the capital structure of Vatti shows insufficient endogenous financing,single financing channels and excessive dependence on commercial credit financing.From the four dimensions of the theory of financial contingency,it is concluded that the main causes of the problems in the structure of Vatti capital are the serious dependence of equity financing path,the decrease of GDP growth rate,the tendency of enterprises to choose equity financing,the increase of debt financing cost caused by the tightening of monetary policy,the active reduction of asset-liability ratio before the outbreak of industry competition,the existence of financing constraints in private enterprises,and the rapid development of enterprises.The demand forcapital forces enterprises to carry out equity financing,capital reserve to increase equity profit distribution scheme,which affects the capital structure,and the lack of profitability determines the insufficiency of enterprise's endogenous financing ability.The relationship between capital structure and sustainable development is judged by value creation/growth rate matrix.Based on the analysis,it is found that Vatti are short of value-added cash at present.In order to ensure the capital balance of Vatti,it is proposed that Vatti should be adjusted from five aspects: increasing equity capital,strengthening endogenous financing capacity,reducing cash dividend ratio,seeking bank loans and seeking government subsidies.The structural adjustment plan has been implemented smoothly.Five measures have also been put forward to guarantee the implementation of the plan: improving the corporate governance structure,improving the R&D and innovation capabilities of enterprises,rationally distributing profits,improving the quality of accounting information,and establishing a good corporate image.