Judicial Improvement And Dynamic Adjustment Of Capital Structure

Corporate borrowing can accelerate the accumulation of capital and promote the development of enterprises.However,an excessively high debt ratio will increase the default risk of a company’s debt,and in severe cases will lead to bankruptcy of the company.High debt ratio has become a major risk factor for my country’s economy.In order to effectively prevent the risk of debt default,the government adopts monetary policy control measures on the one hand,and cooperates with administrative interventions such as policy tasks to reduce leverage in the financial and real sectors;Establish a market-oriented system and improve the judicial system to enhance the role of the market in the optimal allocation of credit resources.Whether the improvement of the judicial system can achieve the goal of deleveraging depends on the cost-benefit trade-off of companies when making leverage choices.On the one hand,borrowing helps companies expand investment and production,and at the same time,it can bring tax deduction effects from debt,thereby increasing corporate value;on the other hand,excessive debt will increase the risk of corporate debt default,thereby reducing corporate value.Therefore,the key to improving the judicial system and reducing leverage is to promote the adjustment of the capital structure of enterprises,and finally achieve the optimal capital structure that maximizes the value of enterprises.The circuit court system is a major reform in the judicial field of our country.Whether and how this system affects the dynamic adjustment of the capital structure of enterprises is the main research topic of this thesis.The establishment of circuit courts will help lower the focus of judicial organs,facilitate litigation by parties,restrain local judicial protectionism,and help the Supreme People’s Court play a guiding role in interpretation,which can effectively improve the judicial environment in the region.The improvement of the judiciary will help reduce the cost of litigation for creditors and enhance the protection of creditors,thereby increasing the debtor’s risk of debt default and forcing the debtor to reduce the debt ratio.This thesis adopts the double-difference model,the system GMM model and the Logit model,taking the implementation of my country’s circuit court system as a natural experimental event,and selecting the data of China’s A-share listed companies from 2008 to 2020 to systematically examine the impact of the establishment of circuit courts on capital.The speed of structural dynamic adjustment and the impact of adjustment methods.The study found that the implementation of the circuit court system has significantly improved the speed of corporate capital structure adjustment.After further distinguishing between the two situations where the debt ratio is higher than the target value and the debt ratio is lower than the target value,it is found that when the debt ratio of the enterprise is higher than the target level,The role of the circuit court in promoting the adjustment of the capital structure of enterprises is more obvious,indicating that the establishment of the circuit court has improved the enforcement power of the regional courts,increased the bankruptcy risk of enterprises,and promoted the deleveraging of high-leverage enterprises.After distinguishing the nature of property rights as state-owned enterprises and private enterprises,this thesis finds that because state-owned enterprises have the natural soft budget constraint advantage,state-owned enterprises face lower bankruptcy risks and have weaker motivation to adjust the debt ratio.The impact of the speed of capital structure adjustment is stronger.In the mechanism research,in order to explore how the circuit court affects the adjustment behavior of corporate capital structure,this thesis studies the influence of the circuit court on the three adjustment methods of increasing debt financing,reducing debt financing and increasing equity financing.The findings show that circuit courts significantly increase the possibility of highly leveraged companies reducing debt financing and inhibit the possibility of further debt financing for highly leveraged companies.lever.For low-leverage companies,the circuit court has significantly improved the possibility of obtaining debt financing and reduced their tendency to further reduce debt,indicating that the circuit court has improved the inefficient financing constrained by bankruptcy risks and improved the company’s external financing capacity.Promote enterprises to adjust to the optimal capital structure.In the robustness test,this thesis conducted a parallel trend test,and found that the experimental group and the control group were in line with the "parallel trend assumption".In order to solve the possible endogeneity problem,this thesis adopts three methods:systematic GMM estimation and replacement of the measures of the explained variables.The results show that the conclusions of this thesis are robust.