Research On The Influence Of Finance Governance On The Adjustment Speed Of Capital Structure

In recent years,China's economy has entered the New Normal,and the market competition is increasingly fierce.Maintaining a reasonable capital structure is one of the important means to improve the competitiveness.Reasonable capital structure can not only reduce the financing cost,improve the corporate governance,but also send a positive signal to the market,and ultimately achieve the purpose of improving the value of the company.Therefore,companies want to keep their capital structure at the optimal level,but due to the change of internal and external environment,the capital structure will inevitably deviate from the optimal level.When the deviation occurs,the management needs to adjust the capital structure.Adjusting too quickly or too slowly can hurt a company's value,so it is important to optimize the adjustment speed.When studying the dynamic capital structure,most scholars pay too much attention to adjustment cost and neglect the agency problem between managers and shareholders.Finance governance can effectively alleviate the agency problem in the dynamic capital structure and reduce the adjustment cost to optimize the adjustment speed,so it is necessary to study on the influence of finance governance on the adjustment speed of capital structure.Based on agency cost theory,dynamic trade-off theory and finance governance theory,this paper discusses in detail the specific performance of agency problem in the dynamic adjustment of capital structure.This paper analyzes the influence of finance governance on the adjustment speed of capital structure from the perspective of adjustment cost and agency cost,and divides them into protection effect and governance effect.This paper takes the listed companies in non-financial industries from 2010 to 2016 as the sample,estimates the target capital structure by direct method,and empirically tests the influence of finance governance on the adjustment speed,the influence of finance governance on the static capital structuer and the impact of proprietary nature and profitability on the governance effect by adding interaction terms on partial adjustment model.The empirical results show that:(1)The downward adjustment speed of capital structure is significantly faster than the upward adjustment speed.(2)When companies have above-target debt,finance governance can significantly reduce the downward adjustment speed.(3)When companies have belowtarget debt,finance governance has no significant impact on the adjustment speed.(4)Finance governance can improve static capital structure.(5)In state-owned companies,the governance effect is weaker.(6)The profitability can significantly weaker the governance effect.The research in this paper is helpful for the management and shareholders to fully understand the agency problem,optimize the adjustment speed of capital structure,keep the capital structure at a reasonable level,and ultimately improve the value of the company.At the same time,finance governance can optimize the adjustment speed of capital structure,which can attract the attention of listed companies to finance governance and improve the level of finance governance.At last,this paper can enrich the theory of dynamic capital structure to some extent.