On the capital structure on investment behavior - Review of relevant literature

[Paper Keywords] capital structure, Investment behavior, literature

[Abstract] directly affect the capital structure of Investment behavior. Combing through the system of important documents related to find home and abroad, foreign scholars believe that the capital structure on Investment behavior mainly in two aspects of debt and financing, that the debt ratio of domestic scholars, debt type and debt financing constraints affect the Investment behavior of key factors. However, many scholars of shareholders, creditors, managers and other stakeholders, the conflicts between the Research as a starting point, ignoring the debt itself, the impact on Investment behavior .

The most classic of corporate finance and one of the most important is what factors determine the business facility Investment capital needed to fund the operation and Investment decisions? Core of this issue is the company's "capital structure" problem. Capital structure Enterprise important part of financial management, which involves not only corporate financial goals, financing, capital costs and the cash flow and other major financial problems, more importantly, is the capital structure of corporate governance, Investment decisions have a significant impact. The paper systematically reviews the capital structure and Investment at home and abroad for the behavior of the relevant literature.

First, foreign Investment on the capital structure of the Behavior Research Summary
On capital structure and investment behavior, the Western literature can be traced back to 1946, the first of .1952 Hicks Durant proposed to the U.S. scholar of net operating income or net income, and capital structure to study the relationship between corporate value. The Durant made a tradition of capital structure theory and modern capital structure theory of transition are. Modigliani and Miller (1958) study pointed out: If the capital market arbitrage completely free and fully competitive, the cost of personal finance alternative investment opportunities and the market rate of return the same, then in the absence of transaction costs and corporate income tax case, the financing required for the same investment funds, whether issuing shares or bonds with no difference. The theorem states that in a series of stringent assumptions and the premise of a perfect world, the enterprise value and independent of capital structure, it became the classic theory of capital structure literature, most of the subsequent Research of many scholars is carried out based on this.

(A) the impact of debt on investment behavior
Jensen and Mackling (1976) pointed out that between shareholders and creditors, conflicts of interest, mainly due to debt contract given to shareholders suboptimal incentive to invest. The one hand, the liabilities of companies, shareholders of high investment risks through the selection of projects to erosion of creditor interests. creditors of the companies expected to act by raising interest rates will increase corporate financing costs, to form a so-called "asset substitution effect." for the "asset substitution effect" phenomenon. Myers (1977) pointed out that business investment behavior can be reduced by less than the maturity structure of debt financing to suppress. corporate issuer of the investment for new short-term debt, original creditor to avoid the income share of new investment projects, which can effectively control the behavior of under-investment. On the other hand , compared with the long-term liabilities, short-term liabilities of enterprises prices relatively insensitive to changes in asset risks, therefore, appropriate to shorten the duration of liabilities can be suppressed to some extent, the assets of the shareholders of alternative behaviors. When other conditions remain unchanged, the firm's future investment opportunities in Vietnam more debt financing and asset-investment alternatives have the greater the probability, therefore, have a large number of investment opportunities, should increase the proportion of short-term debt liabilities. Myesr (1977) also from another point of view of the liabilities of the best of shareholders and managers investment behavior of the constraints. In his view, the interests of managers and shareholders caused by the premise, too much debt will make the manager to give up some positive NPV investment projects, enterprises with high debt levels lower than the level of corporate debt, more likely to give up the valuable growth opportunities. that is, in theory, lead to a potential liability under-investment. But if the future growth opportunities can be identified in advance, so enterprises can take the right measures to reduce financial leverage to make this weaken the negative effect of species. Stulz (1990) ~ study pointed out that the liabilities and negative relationship between investment, when the company has more free cash flow and fewer investment opportunities, over-investment problem will intensify, but the issue of excessive debt can Investment alleviate the problem. Jemen (1986) ~ out the benefits of debt repayment is interest to increase the pressure on companies to reduce the abuse of free cash flow managers to improve the efficiency of your organization to act as a "control and discipline effect ". Zingales et al (1995) ~ in the study of capital structure and behavior control manager with Jenson made a similar assertion.


(B) financing of investment behavior
On the basis of the Ross, Myers and Majluf (1984) from the perspective of asymmetric information to study the financing of investment behavior, the role of capital structure obtained to alleviate the information asymmetry caused by the invalidity of corporate investment behavior, proposed Optimal well-known theory of financing. They believe that investors relative to insiders, the value of corporate assets on the existence of asymmetric information, the firm's equity value will be wrong by the market valuation, if the time for business equity financing for investment projects, undervalued by the market value of the enterprise, and making new projects new investors get a good income, and existing shareholders will suffer losses. In this case, even if the new investment projects with positive net present value, or it may have been to refuse, resulting in insufficient investment. If the business can not be undervalued by issuing securities, such as internal funds or risk-free bonds to finance new investment projects, the lack of business investment will be avoided. Narayanan (1987) and Heinkel and Zechnef1990) obtained by different methods and Myesr and Majluf (1984) a similar conclusion. They proved that when the information asymmetry mainly concentrated in the value of new projects, it will over-invest in negative net present value of certain investment projects will be selected. because when the signal can be observed only when the investment project implementation or not, entirely through the classification of investment projects of enterprises is not possible. At this time, prices of corporate equity financing for all projects to be financed enterprises the average price. Thus, investment in projects with negative net present value of the investment companies to profit by selling shares to make up for losses on investments. Links http://www.hi138.com Research Papers Download Second, the domestic investment on the capital structure of the Behavior Research Summary
(A) the impact of debt ratio on investment
Literature from the domestic point of view, scholars believe that the existence of listed companies and more serious over-investment in alternative assets (Jiang Wei and Shen Yi-feng, 2005, children hope and Lu Zhengfei 2005, oil Hillsborough, 2006, Ho Yuen, 2007). Children hope , Lu Zhengfei (2005) on the debt of listed companies on investment behavior has been studied, the results show that the debt financing of our investments, debt ratio negatively correlated with the investment scale, and the degree of correlation between the two are added the impact of project risk, project risk is greater, the more serious over-investment, on the contrary, the smaller the project risk, the more severe underinvestment. Lu Zhengfei et al (2006) based on the establishment of corporate cash flow hypothesis, the simultaneous equations model study long-term liabilities the impact on business investment, the study found long-term liabilities as a new source of funding and new investment are related. Jiang Wei, Shen Yi-feng (2004) analysis of China's listed companies with different growth in the liabilities of the impact of investment in fixed assets, they The empirical results show that for the high-growth companies, listed liabilities of the company's investment did not lead to lack of assets, but instead led to a serious act, and for the low-growth enterprises, debt, and did not lead to asset substitution, but the role of liability and no control being played. Fan never, Wang Hailong (2006) Use of the Yangtze River Delta region during the 1998-2002 panel data of listed companies in the manufacturing sector, on capital structure, controlling shareholders and the investment behavior of tested, the study found the nature of the controlling shareholder of the debt the relationship between investment behavior has significant influence in the state-controlled circumstances, debt rate and investment spending significant positive correlation, in the private holding of the case, the asset-liability ratio and investment spending significant negative correlation.

(B) Liabilities of financing constraints on investment
Zheng JAC, Hexu Jiang, Wang (2001) studied the financing of listed companies to invest constraints. They selected sample was the year 1996-1999 all the listed companies in Shanghai and Shenzhen exchanges, according to the proportion of state-owned shares of listed companies to group. It was found The lower the proportion of state shares of listed companies has not been significantly more external financing constraints, while the higher the proportion of state shares of listed companies have been external financing constraints. Ho Yuen, Bai Ying, Wen Qiao Qiao (2007) through the establishment of Debt Financing over-investment behavior of large shareholders control the camera model. attempts to explore the major shareholder debt financing under the control of the investment behavior of mechanisms. The results are: the higher the proportion of controlling shareholders, led by seeking private gain, tendencies toward over-investment weaker, debt financing can inhibit the over-investment behavior of controlling shareholders, especially from the controlling shareholder has a strong bargaining power of creditors financing, so as to effectively protect the interests of small shareholders. Xing-full (2oo4) the theoretical and empirical studies have indicated that current debt financing can really improve corporate governance, the governance role of the camera there is liability. relative to the long-term liabilities, short-term debt to some extent, inhibit the excessive corporate investment and asset substitution behavior. because in the case of short term debt, the enterprise facing liquidity pressures, the enterprise must have a greater choice of investment constraints. In order to maintain solvency and avoid bankruptcy, companies do not generally use short-term funds to invest in risky projects.

(C) Liabilities type of structure on investment behavior
Chen Geng, Zhou Jun (2oo4) analysis of the characteristics of different types of debt and debt agency costs in overcoming the advantages and disadvantages, pointed out that the commercial credit risk in advance as fundamental to "lock" and with lower agency costs, its creditors Bank is the main representative in corporate governance, the ability of enterprises to intervene and protect the assets of the claims, but it cost the same in the control agent defects. In addition to debt and investment behavior, the issue of financing preference of scholars have also a lot of Research and draw the corresponding conclusions. Huangshao An, Zhang (2001) equity financing preference of listed companies in China conducted an empirical analysis, the original Red Flag (2003), duct sign (2oo6), Zheng Zuxuan (2005) of listed companies and excessive financing refinancing a systematic study. Raoyu Lei and Wang Yuying (2006) study from another point of view, to the 2001-2003 non-financial A-share companies as a sample, the empirical study of investment shareholder of the company effect was found with the largest proportion of shareholding between investment cash flow sensitivity was a significant negative correlation between the largest shareholder is the state when the first, the negative correlation coefficient greater, when the largest shareholder is the territory of social legal persons, the negative correlation was not significant.

To sum up, combing through the system of important documents related to domestic and foreign, can be seen that the domestic focus of the research literature to shareholders, creditors, managers and other stakeholders as a starting point the conflict between, or nature from the perspective of property rights as a starting point of liabilities and investment behavior, ignoring the characteristics of their liabilities on investment behavior, therefore, need to further explore the impact of debt and investment decision-making relationship. reposted elsewhere in the Research Papers Download http://www.hi138. com