Article Contents
Article Contents

Empirical analysis and optimization of capital structure adjustment

• * Corresponding author: Honglei Xu

The second author is supported by ARC Discovery grant DP160102819

• This paper analyzes capital structure's characteristics and presents its simplified mathematical model. Panel data analysis shows that the listed companies prefer equity financing rather than debt financing. Furthermore, we propose a capital structure optimization model with uncertain equity financing constraints. We formulate the capital structure optimization problem as a two-stage stochastic optimization problem and solve it. Finally, numerical examples show that our optimization approach can improve the statistics result of capital structure adjustment.

Mathematics Subject Classification: Primary: 58E17, 90C15; Secondary: 97M10.

 Citation:

• Table 1.  Asset-liability ratio and institutional investor's shareholding ratio in various sectors

 Trade Asset-Liability Ratio IIShare Mining 48.19% 18.39% Electric Heating Water 60.33% 28.55% Real Estate 62.77% 21.12% Construction 70.69% 16.66% Traffic 49.62% 21.01% Agriculture 41.71% 17.6% Wholesale and Retail 56.37% 18.1% Entertainment 46.19% 13.15% Information Technology 37.02% 18.16% Manufacturing 29.86% 16.88% 52.21% 17.19%

Table 2.  Institutional investor's shareholding ratio

 Trade Public Offering Funds Securities Insurance Trader Social Insurance Funds Other Sum Mining 4.71% 3.23% 4.03% 3.76% 2.66% 18.39% Electric Heating Water 6.31% 3.17% 3.48% 4.76% 10.83% 28.55% Real Estate 5.08% 3.23% 5.21% 2.66% 4.94% 21.12% Construction 5.73% 2.16% 2.33% 3.09% 3.35% 16.66% Traffic 3.14% 2.64% 3.72% 3.53% 7.98% 21.01% Agriculture 5.32% 2.26% 3.14% 3.05% 3.83% 17.6% Wholesale and Retail 6.62% 1.79% 2.93% 2.77% 3.99% 18.1% Entertainment 2.33% 0.74% 1.67% 1.24% 7.17% 13.15% Information Technology 8.91% 2.27% 2.71% 2.73% 1.54% 18.16% Manufacturing 6.24% 2.36% 2.7% 2.87% 2.71% 16.88% Synthesize 4.26% 1.93% 3.65% 3.28% 4.07% 17.19%

Table 3.  Descriptive Statistics

 Variables N Mean Sd Min Max IIShare 8559 0.181 0.179 0 0.9102 Mortgage Capacity 8559 0.239 0.179 0 0.971 Grow 8559 5.712 235.6 -57.96 20,371 Size 8559 21.86 1.350 15.60 28.51 Ownership Concentration 8559 59.53 35.75 7.32 100 NDTS 8559 0.0311 0.0333 -0.114 1.529 Profitability 8559 0.0526 0.310 -6.353 22.00 Deb 8559 0.0321 0.2801 -8.1073 6.1282 Capital Cost 8559 5.9239 3.501 1.6552 25.7761
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