Does Time Effect Exist in Capital Structure of China’s Listed Companies ?
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| Title | Does Time Effect Exist in Capital Structure of China’s Listed Companies ?
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| Author | Ding Zhiguo, Zhang Yang, Zhang Qianyu and Ding Yuyang |
| Organization | Jilin University |
| Email | dingzg@jlu.edu.cn； |
| Key Words | Listed Company; Capital Structure; Time Effect; Endogenous; Listing Exuberance |
| Abstract | Studies today around the world mostly focus on the influence factors and results of capital structure, but the issue that whether generalized time-varying laws exists in capital structure with the change of listing schedule removed external factors’ impact has been neglected. This paper chooses the whole quarterly data during 2002—2014 from listed companies in China’s A share market as sample, and empirically examines the generalized laws and endogenous feature of public companies’ capital structure in China with time varying then gives the guess in theory to explain the economic reason of the existence of endogenous time effect in listed companies’ capital structure. Empirical test shows that corporation's capital structure appears significantly inverted U-shaped curve pattern, which manifests time-varying characteristics rise at first and then fall down. Even if we removed the effect of exogenous factors, the time-varying regularity mentioned above stays sound, so we can come to the conclusion that the capital structure of listed companies has significant endogenous time effect. A reasonable guess stands that the inflexible conditional constraint make companies have a pretty low capital structure. Listing exuberance that successfully coming into market brought to the business manager make capital structure shoot up. Then manager would reasoningly weigh the rise of enterprise value brought by rise in capital structure against the decline of enterprise value brought by aggravation of bankrupt risk, so listed companies’ capital structure shows rising in a period of time and then going down. This conclusion would offer a brand new perspective and data support to the following research on capital structure. |
| Serial Number | WP1002 |
| Time | 2015-12-30 |
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