Empirical analysis and optimization of capital structure adjustment

Jinying Ma; Honglei Xu

doi:10.3934/jimo.2018191

Article Contents

2020, Volume 16, Issue 3: 1037-1047. Doi: 10.3934/jimo.2018191

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Empirical analysis and optimization of capital structure adjustment

Jinying Ma^1, and
Honglei Xu^2,3, ,

1.
Business School, Hunan Normal University, Changsha 410081, China
2.
School of Electrical Engineering, Computing and Mathematical Sciences, Curtin University, Perth, 6185, Australia
3.
School of Information Science and Engineering, Fujian University of Technology, Fuzhou 350118, China

^* Corresponding author: Honglei Xu
^* Corresponding author: Honglei Xu

Received: July 2018

Revised: August 2018

Early access: January 2019

Published: March 2020

The second author is supported by ARC Discovery grant DP160102819

Abstract / Introduction Full Text(HTML) Figure(0) / Table(3) Related Papers Cited by

Abstract

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.

Keywords:

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

Citation:

Full Text(HTML)

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%

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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%

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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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