Cross-Ownership And Corporate Capital Structure Adjustment

The capital structure decision is the key part of the enterprise’s financial decision.Whether the capital structure is reasonable or not will directly affect the enterprise’s business decision and long-term development,and will also have a significant impact on the enterprise value.According to the trade-off theory,there is an optimal target value.Adjusting the capital structure in the target direction is instrumental in the improvement of enterprise value,while the upward or downward deviation of the capital structure will have a negative impact on enterprises.With the deepening of research,scholars found that the target capital structure of enterprises is not a fixed value,but is affected by many factors.In order to create enterprise value to the maximum extent,we must take a series of measures to reduce the deviation between the actual capital structure and the target capital structure based on the changes of internal and external factors of the enterprise,and constantly seek and approach the target capital structure of the enterprise.However,the limited internal resources of enterprises are often a major obstacle in the process of capital structure adjustment.In order to obtain more resources,enterprises have begun to focus on social networks in order to obtain resources from them.The social network theory shows that any organization is not a completely independent subject,and forms a stable social network structure with other organizations through daily communication and interaction.Various economic behaviors and management decisions of enterprises are embedded in the social network connection and are affected by the social network connection.In view of the widespread existence of the current social network economic phenomenon,we need to change our perspective and embed enterprise decision-making and business activities into the social network relationship.In recent years,the economic links between enterprises through Cross-ownership are particularly common.However,there are still two completely opposite views on the impact of Cross-ownership on the development of enterprises.One view is that Cross-ownership can play an integrated role by virtue of information advantages,financing resources and governance mechanisms,It has synergy effect on the innovation and development of enterprises,external cooperation,access to financing and corporate governance,so as to promote win-win cooperation between enterprises;Another view is that the Cross-ownership will increase the collusion tendency between enterprises in the same industry in the product market,reduce the role of market price mechanism and the degree of competition,and obtain monopoly profits from the perspective of maximizing the benefits of their portfolios.So far,the discussion of Cross-ownership has not reached an unanimited conclusion,and more research is urgently needed to provide empirical evidence for deepening the understanding of the economic consequences of Cross-ownership.Therefore,from the perspective of corporate capital structure adjustment,starting from social network theory,capital structure theory,principal-agent theory and information asymmetry theory,this thesis puts forward the hypothesis of this thesis on the basis of mastering the above theories through reading relevant literature.Secondly,taking the A-share listed companies in Shanghai and Shenzhen of China from 2007 to 2020 as the research sample,this thesis specifically examines the effect of Cross-ownership on the adjustment of corporate capital structure and its impact path.Through theoretical analysis and empirical test,this thesis draws the following conclusions: First,Cross-ownership have a significant negative correlation with the deviation degree of enterprise capital structure,indicating that Cross-ownership can reduce the deviation degree of enterprise capital structure and its target capital structure,supporting the view of "governance synergy".After a series of robustness tests and endogenous tests,the above conclusions are still valid.Second,the mechanism study found that Crossownership can reduce the cost of equity financing of listed companies,reduce the degree of information asymmetry between enterprises,strengthen the motivation of enterprise capital structure adjustment,and reduce the degree of deviation between the actual capital structure and the target capital structure of enterprises through the allocation of directors/senior management seats that affect the decision-making of enterprise capital structure.Thirdly,in terms of heterogeneity,the study found that the impact of Cross-ownership on the deviation degree of corporate capital structure is more significant in enterprises with higher marketization,more stable Cross-ownership,and higher debt levels.The above research conclusions,On the one hand,the above research conclusions expand the research perspective of the economic consequences of Cross-ownership,enrich the relevant literature of Cross-ownership,and provide direct empirical evidence for the linkage relationship between Cross-ownership and enterprise capital structure adjustment;On the other hand,it expands the research perspective of enterprise capital structure adjustment.This thesis finds that the synergetic governance effect of Cross-ownership is an important factor that affects the capital structure adjustment of enterprises,which helps the market to better understand the capital structure decisions of enterprises.