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Based on the capital structure of listed companies, the interests of managers encroachment of results

Author: ZhangShuMei From: www.yourpaper.net Posted: 2009-09-30 10:03:01 Read:
Abstract: reasonable capital structure are important for any listed company, not only because of the financial risk of the capital structure of the enterprise, results of operations have a significant impact, more importantly, capital structure and corporate governance structure. At present, China's listed companies, for historical reasons, the capital structure is irrational, thus restricting the improvement of corporate governance structure. The research capital structure produce significant positive impact on the interests of managers encroachment behavior, suggesting that debt financing can not suppress the interests of managers occupation of behavior, the impact of the capital structure of the company performance is nonlinear, there is an inverted U-shaped relationship This result supports the dynamic trade-off theory, confirmed the presence of the target capital structure, at the same time, managers seize the benefits be results of a significant negative impact. This paper mainly discusses the capital structure, managers seize the benefits of the results of research.
Keywords: capital structure of listed companies; interests of managers; company performance

I. Introduction

The managers interests encroachment behavior prevalent in listed companies at home and abroad, just seize the benefits vary. Can not be completely consistent with the interests of the principal-agent theory, the interests of the company's managers and shareholders and creditors, the most common occupation of behavior is excessive service consumer behavior, managers over the interests of encroachment behavior will result in a decline in enterprise value. Jensen (1986) pointed out that debt financing can inhibit maximizing behavior of managers to pursue their own interests, however, debt financing constraint role in China's listed companies exists? If managers seize the benefits of the company's capital structure and performance of the company on the framework of a system, the answer to these two issues, how will? Scholars of debt financing impact of the managers interests encroachment behavior whether small, while of research managers seize the benefits of behavior on the performance of the company's literature is relatively less.
Chen Donghua, Chen Xinyuan (2005) studied the impact of the remuneration of managers in state-owned enterprises in China serving consumer behavior, the empirical results show that the service consumer behavior in China's listed companies, the managers by corporate rentals, absolute pay and firm size factors they found that the liabilities financing can not effectively constrain managers serving consumer behavior. Wang Man-Four (2006) studied the impact of debt financing on the managers wages and on-the-job consumption, the analysis showed that the liabilities financing heavier consumption behavior of the manager's job, and found in the sample group with higher agency costs, on-the-job consumption on company performance have a negative impact; positive correlation lower agency costs in the sample group, serving consumer and corporate performance.
As can be seen from the above research results, study the capital structure of the existing literature, the interests of managers occupied with the Secretary of the relationship between the results of the three, often one of them as an explanatory variable, while the other two or one as an explanatory variable, the establishment of a single equation regression model to conduct an independent study, parameter estimation inevitably biased and inconsistent. In this paper, trade-off theory, agency theory, as well as financing order theory is based on the capital structure, managers seize the benefits and results of the endogenous variables, the establishment of simultaneous equations, with eight years of data of listed companies, the use of the three-stage least squares method the system is estimated that, in order to draw on capital structure, managers seize the benefits and results of mutual influence the relationship between the study results, which provide a useful reference for the management practices of listed companies in China.

Second, capital structure, managers seize the benefits of the results of theoretical research

The capital structure of the article will be explained based on the idea of ??the trade-off theory, agency theory, the theory of the Financing Order and enterprise rent managers to seize the benefits and results of the interaction between the relations which the theoretical basis of the simultaneous equations model as this article.
Tradeoff theory in considering the company exists Financial risk, bankruptcy costs and agency costs explain the relationship between the value of the capital structure. The trade-off theory suggests that the risks and costs associated with the increase due to the increase in the corporate debt ratio, businesses can not unlimited pursuit of tax cuts revenue (taxes the baffle income). With the increase in corporate debt, the company fall into financial difficulties and even the possibility of bankruptcy will also increase, the corresponding costs of bankruptcy, financial distress costs, agency costs and related liabilities will increase, thereby reducing the enterprise value. Therefore, the enterprise value of the capital structure will produce a nonlinear, inverted U-shaped "relationship between the corporate existence of the target capital structure.
Dynamic trade-off theory is established on the basis of the trade-off theory developed, dynamic trade-off theory that the company hopes its asset-liability ratio in the target capital structure, but due to the presence of adjustment costs, the Company's actual capital structure adjustment company the capital structure of the bring more benefits than the adjustment costs, the company will conduct proactive adjustments. Based on the trade-off theory, we can be seen as the company's current capital structure of the state is a result of the companies have taken the initiative to select the target capital structure.
3. Financing Order theory put forward on the basis of information asymmetry. According to the theory of the Financing Order, when the company has good operating results, the company is more likely from internal financing to meet its capital needs, therefore, the good performance of the company has a lower asset-liability ratio. In contrast to the trade-off theory and dynamic theory, based on the theory of financing order, we can put the company's current capital structure, the company in the process of considering the financing needs passive generated a capital structure of the state.
Tradeoff theory, dynamic theory and the financing order theory, the paper argues that the existence of the mutual relationship between the company's capital structure and corporate performance, made the following assumptions.
Assuming 1: Based on the trade-off theory and dynamic trade-off theory, the capital structure of the performance of the company will produce non-linear effects, namely the "inverted U" relationship.
Assumption 2: The negative correlation between company performance and capital structure based on the theory of the Financing Order
Liabilities the financing can inhibit managers pursuit of self-interest maximizing behavior, reduce agency costs. The reason is that the liabilities of the payment of principal and interest can reduce managers to control the cash, it is more important not fulfill the increased likelihood of maturing debt, with the increase in the debt of the company, not its due debts will damage its reputation, and future career path, thereby increasing the debt financing can promote the company managers to reduce the pursuit of self-interest maximizing behavior, such as the behavior of the interests of the occupation of this study. This conclusion, however, a prerequisite for the existence of a sound mechanism for protection from its creditors and managers market, the only way not to fulfill the maturing debt will really damage to the reputation of the company managers and their future career path for managers encroachment effective behavior constraints, but the listed companies in China do not have the prerequisite. Based on this, we made the following assumptions:
Assuming 3: debt financing can not be a constraint for encroachment behavior of the interests of managers, company managers can control the contrary increase resources, and thus stimulate the interests of managers encroachment behavior, and that the capital structure of managers to seize the benefits generated positive impact.
Similarly, according to the principal-agent theory, the interests of managers encroachment behavior will cause serious agency problems, resulting in a huge agency costs have a negative impact on the issue of results. This article made the following assumptions.
Hypothesis 4: the managers interests encroachment behavior will be the period of performance of the company have a negative impact
According to the idea of ??enterprise rent, the property rights of the various elements of the right to obtain corporate rental enterprise rents they are bound to be allocated in accordance with some form of company managers as the main elements of property rights, natural part of the requirements for enterprise rent, and the company management access to enterprise rent can seize the benefits of behavior, based on this, this article more than a corporate performance indicators to measure corporate rentals, and made the following assumptions:
Assumption 5: current managers to seize the benefits of the behavior of a performance of the company will have a positive impact, and that a better performance of the company, the current managers seize the benefits of the more serious acts.

Third, the empirical analysis
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