A Review of Foreign Literature of Capital Structure Adjustment and Prospects 17720945 魏冰冰 

CONTENTS Basic Information Research Framework Basic Theory The development of the review Conclusion（Research Direction）

Basic Information Authors: HU Jian-xiong and MAO Ning Source: Foreign Economics & Management Aug.2014, Vol. 36 NO.8

Capital Structure Adjustment Research Framework Unified Analytical Framework Perspective of Strategic Decision Future Prospects static balance theory Dynamic Trade-off Theory Financial Flexibility Capital Structure Adjustment Optimal Order Theory Manager Heterogeneity Market Timing Theory Debt Heterogeneity Other Theories Speed of Adjustment Adjustment Mode Target capital structure Basic Theory The development of the review Research direction

Research Framework Basic Theory The adjustment of capital structure is based on a series of theories, such as Dynamic Trade-off Theory, Optimal Order Theory and Market Timing Theory. And then capital structure adjustment theory evolves into two development directions. The Dynamic Trade-off Theory (Target Capital Structure) Optimal Order Theory (information asymmetry ) and The Market Timing Theory (irrational behavior of investors)

Capital Structure Adjustment Research Framework Capital Structure Adjustment The speed of adjustment Influence factors: ①external factors: Industry factors, institutional factors, financing constraints, macroeconomic conditions, stock mispricing etc. ②internal factors: Profitability, growth opportunities, company size, debt contract, deviation distance (the degree of deviation between real capital structure and target capital structure) etc.

Capital Structure Adjustment Research Framework Capital Structure Adjustment Adjustment Mode The alternative means of adjustment of capital structure include credit lines, choice of share dividends, share buybacks, cash and other means, each of which corresponds to different adjustment costs respectively, which also affects the decision-making process of the adjustment of capital structure.

Capital Structure Adjustment Research Framework Capital Structure Adjustment There are complex correlations and causal relationships among various financial decisions of the company. Therefore, scholars began to explore the decision making of capital structure adjustment from the perspective of corporate strategic decision.

Conclusion The literature review shows that there are two main deficiencies in the existing research on capital structure adjustment. a reasonable explanation for the phenomenon of low leverage (or even zero leverage) Lack of analysis of managers' behavior factors

Conclusion In view of the above shortcomings, future research can be improved and expanded from the following three aspects: Research on the relationship between financial flexibility and capital structure adjustment decision Research on capital structure adjustment decision under the assumption of manager heterogeneity Research on capital structure adjustment decision under the condition of debt heterogeneity

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