资本结构外文翻译文献编辑
资本价格与经济结构外文文献翻译中英文2020
资本价格与经济结构外文文献翻译中英文2020英文The relative price of capital and economic structureRoberto SamaniegoAbstractAre trends in the price of capital technological in nature? First, we find that trends in the relative price of capital vary significantly across countries. We then show that a multi-industry growth model, calibrated to match differences in economic structure around the world and productivity growth rates across industries, accounts for this variation –mainly due to variation in the composition of capital. The finding indicates that the rate of change in the relative price of capital can be interpreted as investment-specific technical change – the extent to which productivity growth is relatively more rapid in the capital-producing sector. The model also accounts for the empirical dispersion of investment rates, but not of rates of economic growth.Keywords: Investment-specific technical change, Multi-sector growth models, Structural transformation, Capital goods prices IntroductionDeclines in the relative price of capital are viewed as an important factor of economic growth in the United States (US). See for example work by Hulten (1992), Greenwood et al. (1997), Cummins and Violante(2002) and Oulton (2007). These studies typically identify the decline in the price of capital as being technological in nature, reflecting faster productivity growth in the production of new capital than in the production of consumption and services – a phenomenon known as investment-specific technical change (ISTC). However, the extent to which the relative price of capital declines in other countries is not known. In addition, it is not known whether trends in the price of capital around the world can be given a technological interpretation, such as ISTC. An alternative hypothesis is that these differences are due to the presence of barriers to capital accumulation, as proposed by Restuccia and Urrutia (2001) to account for differences in levels of the price of capital.We begin by documenting that the rate at which the relative price of capital changes over time varies significantly across countries. We find that the median growth rate of the price of capital is zero. In addition, the price of capital increasesin as many places as it decreases. This indicates that, if there is a technological explanation for this phenomenon, technical progress in capital relative to other sectors must vary widely around the world.If the explanation is indeed technological, however, one would expect such glaring differences in productivity to be evidence of draconian barriers to international technology transfer (or trade). The alternative possibility is that capital and consumption are themselveshighly disaggregated, and that there are substantial differences in the composition of capital and consumption around the world that account for the aggregate differences in the trends in the relative price of capital.We ask whether this variation can be accounted for by differences in industry composition. The reason we do this is as follows. It is well known that rates of technical progress in the US differ significantly not just between capital and non-capital, but also across types of consumption, services and capital. Thus, even if productivity growth rates are constant across countries for each industry, the rate of change in the relative price of capital may be different if the composition of capital –or the composition of consumption and services – is different. Indeed, we find that the composition of capital is skewed towards high-TFP growth capital types in countries where the price of capital declines rapidly. We therefore ask: to what extent can differences around the world in industry composition account for variation in the rate at which the relative price of capital changes?To this end, we employ a canonical multi-industry growth model. In the model, the composition of the economy evolves as a result of changes in prices of different goods or services that agents consume, as well as changes in the prices of different capital goods. In turn, these are determined by differences in productivity growth rates across industries.We calibrate the model using detailed productivity growth data from the US, as well as data on the initial composition of economies around the world in the year 1991. We use constant productivity growth rates for a given industry in all countries partly because of data limitations; however, as mentioned, significant barriers to technological transfer would have to exist to significantly deviate from this assumption. Composition is a key part of the “no barriers” hypothesis.Strikingly, we find that the model delivers a close match to the rate of change in the relative price of capital, as measured using the Penn World Tables (PWT) version 7.1. In a statistical sense, the model can account for the entirety of the magnitude of variation of the growth rate in the relative price of capital over the period from 1983 to 2011, simply based on industry TFP growth rate differences and on differences in industry composition across countries. Not only does the model match the extent of variation, but also the correlations between model-generated capital price growth rates and those in the data are highly significant. We conclude that differences in the relative price of capital around the world can be interpreted as a technological phenomenon –ISTC –and that a key factor behind these differences is industry composition.The link between composition and the decline in the relative price of capital could be for two reasons: differences in the composition of capital, or in the composition of non-capital. We refer to these possibilities asthe capital hypothesisand the consumption hypothesis, respectively. We study the importance of each hypothesis by removing productivity growth differences in the capital producing industries, and then separately removing them in the non-capital producing industries. We find that the capital hypothesis is mainly responsible for cross-country variation in ISTC: removing productivity growth in non-capital makes very little difference to the results, whereas removing productivity growth in capital-producing industries results in model-generated statistics that bear little relationship with the data.Finally, we ask to what extent a growth model driven solely by these factors can account for differences in aggregate behavior across countries over the sample period. Specifically, we look at investment rates and rates of economic growth. This is a non-trivial task, as it requires solving for investment patterns in a model where conditions for a balanced growth path do not hold in general. We find that the model generates investment rates that are strongly correlated with investment rates in the PWT 7.1 data and the PWT 9.1 data, although they underpredict the extent of empirical variation in investment rates. Thus, the model is able to capture cross-country variation in both ISTC and (to a lesser extent) investment rates, solely based on differences in industry composition. However, the model does not generate a good match to variation in rates of economic growth in the PWT 7.1 data, nor in the PWT 9.1 data. We conclude thatthere is widespread divergence in the rate of ISTC around the world, and that this accounts for variation in investment, but that economic growth rates are due to other factors. Interestingly, when we give each country an aggregate productivity trend that exactly matches its economic growth rate in the data, investment rates are no longer correlated with those in the data, suggesting that whatever factors do underlie rates of economic growth are not simply captured by a trend in productivity.The results contribute to a long-standing debate regarding whether or not changes in the efficiency of investment are an important factor of growth. This debate goes back to Solow (1962), Abramovitz (1962) and Denison (1964). Greenwood et al. (1997) find that, in the US, more than half of economic growth can be accounted for by ISTC in a general equilibrium growth accounting framework. We provide a clear answer to the question about whether differences in the relative price of capital can be attributed to barriers or to technological factors, indicating that changes in the efficiency of investment are an important factor affecting growth rates. This is not to say that there is no scope for barriers to be important for the relative price of capital; however, their impact might not be direct, but rather indirect, through their influence on economic composition. More broadly, this suggests that future work on the manner in which factors of economic growth might be affected by policy through the channel of economic composition could be fruitful.DiscussionComments on institutionsWe find that the model without barriers accounts well for the empirical magnitude and variation in loggq, solely on the basis of economic composition. On the other hand, our findings do leave the door open for institutional factors or other barriers to influence loggq indirectly, through any impact they might have on economic composition.What might these determinants be? There is a precedent in the literature for the idea that policy or institutional factors may affect composition. For example, Samaniego (2006) shows in an open-economy context that labor market regulationcan affect comparative advantage in industries depending on their rate of ISTC, skewing industrial composition towards industries that use capital types with low values of gi (an effect termed high-tech aversion). Also, Ilyina and Samaniego (2012) show that when technology adoption requires external financing, financial underdevelopment also skews industrial composition towards low-tech industries. This begs the question as to whether any policy or institutional indicators might be statistically related to our findings. Of course, there is a question of reverse causality: political economy considerations imply that countries that depend on technological transfer rather than de novo innovation for growth mightadopt particular kinds of institutions, see for example Boldrin and Levine (2004). Given this, we briefly explore whether there is suggestive evidence of a link between loggq in the data and institutions, without taking a stand on the direction of causality.Following Samaniego (2006) we look at firing costs (drawn from the World Bank, firing costs paid by workers with at least one year's tenure, FC). We also look at other forms of regulation that have been found to be important for aggregate outcomes – namely product market regulation, measured using entry costs paid as a share of GDP, EC, as reported by the World Bank. See Moscoso-Boedo and Mukoyama (2012). Another possibility suggested by Ilyina and Samaniego (2012)is financial development, which we measure using FD, the credit-to-GDP ratio, as in King and Levine (1993). Data on FC, EC and FD are from the World Bank 1960–2010.In addition, Acemoglu and Johnson (2005) and others argue that financial development is ultimately derived from the state of contracting institutions and property rights institutions. We measure the strength of contracting institutions using the negative of the index of legal system formality from Djankov et al. (2003), which we call CONT. We measure property rights enforcement using the index developed by the Property Rights Alliance (2008), PROP, averaged over the available period 2007–2013. Finally, we also look at intellectual property rights, whichhave been related to the generation and diffusion of technology, see Samaniego (2013) for a survey. We measure intellectual property rights IPR, using the patent enforcement method developed in Ginarte and Park (1997), as reported by the World Bank, averaging over the available sample. Ilyina and Samaniego (2011) find that copyright enforcement specifically is a form of IPR enforcement that bears the strongest relationship to financial development –see also Samaniego (2013). The BSA (Software Alliance) publishes the rate at which unlicensed software is used in different countries. Following the Property Rights Alliance (2008), we take this measure (times −1) as an indicator of copyright enforcement. Finally, we also look at human capital, HC, using the standard Barro and Lee (2013) schooling-based measure averaged over the period. While this is not an institutional measure as such it is an important country characteristic which could be related to the need or ability to produce or import high-tech capital goods.Comments on tradeThe model abstracts from international trade. Eaton and Kortum (2001) find that machinery is often imported by developing countries, which might suggest that the price of capital could be significantly affected by trade rather than by domestic output, and that domestic output shares might not be indicative of the composition of capital. However their data is for 1985, so it is not clear that their findings are relevant forthe relative price of capital in more recent data. Indeed, using data for 1995, Caselli and Wilson (2004) find that the composition of imported machinery is very highly correlated with the composition of domestically-produced capital, both in developed and developing countries. Nonetheless, it would certainly be interesting to explore the extent to which trends in the price of capital might be affected either by trade flows or by changes in trade costs. In particular, Mutreja et al. (2018) argue that reductions in trade costs may lower the relative price of capital by allowing countries to more easily access capital from countries that might produce them more efficiently. This suggests that one factor that might contribute to the dispersion in investment rates could be trade costs.Concluding remarksWe document extensive differences in the rate of change in the relative price of capital around the world. We then show that these differences can be accounted for on the basis of differences around the world in economic composition, without recourse to any barriers or frictions. We also find that a general equilibrium model economy accounts for a significant portion of the variation in the rate of change in the relative price of capital and for differences in investment rates around the world, although not for differences in rates of economic growth. We conclude that these differences can be given a technological interpretation,based on differences in composition among industries with different rates of technical progress. As a result, the term “investment-specific technical progress,” which the literature widely identifies with declines in the relative price of capital, is appropriate. Given the key role played by industry composition in this phenomenon it seems important to understand what are the deep determinants of industry composition. Is it due to comparative advantage or other trade-theoretic mechanisms? Is due to policy distortions, as suggested by Samaniego (2006) or Ilyina and Samaniego (2012)? Or does it result form hysteresis, for example, based on the date at which the process of development began in earnest and the speed of transition, as in Ngai (2004)? These are likely useful questions for further research.中文资本相对价格与经济结构罗伯托·萨曼涅戈摘要资本价格的趋势本质上是技术性的吗？首先，我们发现各国的资本相对价格趋势差异很大。
资本结构外文文献翻译
资本结构外文文献翻译外文资料翻译—英文原文How Important is Financial Risk?IntroductionThe financial crisis of 2008 has brought significant attention tothe effects of financial leverage. There is no doubt that the highlevels of debt financing by financial institutions and households significantly contributed to the crisis. Indeed, evidence indicates that excessive leverage orchestrated by major global banks (e.g., through the mortgage lending and collateralized debt obligations) and the so-called “shadowbanking system” may be the underlying cause of the recent economic and financialdislocation. Less obvious is the role of financial leverage among nonfinancial firms. To date, problems in the U.S. non-financial sector have been minor compared to the distress in the financial sector despite the seizing of capital markets during the crisis. For example, non-financial bankruptcies have been limited given that the economic decline is the largest since the great depression of the 1930s. In fact, bankruptcy filings of non-financial firms have occurred mostly in U.S. industries (e.g., automotive manufacturing, newspapers, and real estate) that faced fundamental economic pressures prior to the financial crisis.This surprising fact begs the question, “How important is financialrisk for non-financial firms?” At the heart of this issue is the uncertainty about the determinants of total firm risk as well as components of firm risk.StudyRecent academic research in both asset pricing and corporate finance has rekindled an interest in analyzing equity price risk. A current strand of the asset pricing literature examines the finding of Campbell et al. (2001) that firm-specific (idiosyncratic) risk has tended to increase over the last 40 years. Other work suggests that idiosyncratic risk may be a priced risk factor (see Goyal and Santa-Clara, 2003, among others). Also related to these studies is work by Pástor and Veronesi (2003) showing how investor uncertainty about firm profitability is an important determinant of idiosyncratic risk and firm value. Other research has examined the role of equity volatility in bond pricing (e.g., Dichev, 1998, Campbell, Hilscher, and Szilagyi, 2008).However, much of the empirical work examining equity price risktakes the risk of assets as given or tries to explain the trend in idiosyncratic risk. In contrast, this外文资料翻译—英文原文paper takes a different tack in the investigation of equity price risk. First, we seek to understand the determinants of equity price risk at the firm level by considering total risk as the product of risks inherent in the firms operations (i.e., economic or business risks) andrisks associated with financing the firms operations (i.e., financial risks). Second, we attempt to assess the relative importance of economic and financial risks and the implications for financial policy.Early research by Modigliani and Miller (1958) suggests thatfinancial policy may be largely irrelevant for firm value because investors can replicate many financial decisions by the firm at a low cost (i.e., via homemade leverage) and well-functioningcapital markets should be able to distinguish between financial and economic distress. Nonetheless, financial policies, such as adding debt to the capital structure, can magnify the risk of equity. In contrast, recent research on corporate risk management suggests that firms mayalso be able to reduce risks and increase value with financial policies such as hedging with financial derivatives. However, this research is often motivated by substantial deadweight costs associated withfinancial distress or other market imperfections associated withfinancial leverage. Empirical research provides conflicting accounts of how costly financial distress can be for a typical publicly traded firm.We attempt to directly address the roles of economic and financialrisk by examining determinants of total firm risk. In our analysis we utilize a large sample of non-financial firms in the United States. Our goal of identifying the most important determinants of equity price risk (volatility) relies on viewing financial policy as transforming asset volatility into equity volatility via financial leverage. Thus, throughout the paper, we consider financial leverage as the wedgebetween asset volatility and equity volatility. For example, in a static setting, debt provides financial leverage that magnifies operating cash flow volatility. Because financial policy is determined by owners (and managers), we are careful to examine the effects of firms? asset and operating characteristics on financial policy. Specifically, we examine a variety of characteristics suggested by previous research and, as clearly as possible, distinguish between those associated with the operations of the company (i.e. factors determining economic risk) and those associated with financing the firm (i.e. factors determining financial risk). We then allow economic risk to be a determinant of financial policy in the structural framework of Leland and Toft (1996), or alternatively,外文资料翻译—英文原文in a reduced form model of financial leverage. An advantage of the structural model approach is that we are able to account for both the possibility of financial and operating implications of some factors (e.g., dividends), as well as the endogenous nature of the bankruptcy decision and financial policy in general.Our proxy for firm risk is the volatility of common stock returns derived from calculating the standard deviation of daily equity returns. Our proxies for economic risk are designed to capture the essential characteristics of the firms? operations andassets that determine the cash flow generating process for the firm. For example, firm size and age provide measures of line of- businessmaturity; tangible assets (plant, property, and equipment) serve as ap roxy for the …hardness? of a firm?s assets;capital expenditures measure capital intensity as well as growth potential. Operating profitability and operating profit volatility serve as measures of the timeliness and riskiness of cash flows. To understand how financial factors affect firm risk, we examine total debt, debt maturity, dividend payouts, and holdings of cash and short-term investments.The primary result of our analysis is surprising: factorsdetermining economic risk for a typical company explain the vastmajority of the variation in equity volatility.Correspondingly, measures of implied financial leverage are much lower than observed debt ratios. Specifically, in our sample covering 1964-2008 average actual net financial (market) leverage is about 1.50 compared to our estimates of between 1.03 and 1.11 (depending on model specification and estimation technique). This suggests that firms may undertake other financial policies to manage financial risk and thus lower effective leverage to nearly negligible levels. These policies might include dynamically adjusting financial variables such as debt levels, debt maturity, or cash holdings (see, for example, Acharya, Almeida, and Campello, 2007). In addition, many firms also utilize explicit financial risk management techniques such as the use of financial derivatives, contractual arrangements with investors (e.g. lines of credit, call provisions in debt contracts, or contingencies insupplier contracts), special purpose vehicles (SPVs), or other alternative risk transfer techniques.The effects of our economic risk factors on equity volatility are generally highly statistically significant, with predicted signs. In addition, the magnitudes of the effects are substantial. We find that volatility of equity decreases with the size and age of the firm. Thisis intuitive since large and mature firms typically have more stable lines of英文原文外文资料翻译—business, which should be reflected in the volatility of equity returns. Equity volatility tends to decrease with capital expenditures though the effect is weak. Consistent with the predictions of Pástor and Veronesi (2003), we find that firms with higher profitability and lower profit volatility have lower equity volatility. This suggests that companies with higher and more stable operating cash flows are less likely to go bankrupt, and therefore are potentially less risky. Among economic risk variables, the effects of firm size, profit volatility, and dividend policy on equity volatility stand out. Unlike some previous studies, our careful treatment of the endogeneity of financial policy confirms that leverage increases total firm risk. Otherwise, financial risk factors are not reliably related to total risk.Given the large literature on financial policy, it is no surprise that financial variables are,at least in part, determined by the economic risks firms take. However, some of the specific findings areunexpected. For example, in a simple model of capital structure, dividend payouts should increase financial leverage since they represent an outflow of cash from the firm (i.e., increase net debt). We find that dividends are associated with lower risk. This suggests that paying dividends is not as much a product of financial policy as a characteristic of a firm?s operations (e.g., a maturecompany with limited growth opportunities). We also estimate how sensitivities to different risk factors have changed over time. Our results indicate that most relations are fairly stable. One exception is firm age which prior to 1983 tends to be positively related to risk and has since been consistently negatively related to risk. This is related to findings by Brown and Kapadia (2007) that recent trends in idiosyncratic risk are related to stock listings by younger and riskier firms.Perhaps the most interesting result from our analysis is that our measures of implied financial leverage have declined over the last 30 years at the same time that measures of equity price risk (such as idiosyncratic risk) appear to have been increasing. In fact, measures of implied financial leverage from our structural model settle near 1.0 (i.e., no leverage) by the end of our sample. There are several possible reasons for this. First, total debt ratios for non-financial firms have declined steadily over the last 30 years, so our measure of implied leverage should also decline. Second, firms have significantly increased cash holdings, so measures of net debt (debtminus cash and short-term investments) have also declined. Third, the composition of publicly traded firms has changed with more risky (especially technology-oriented)英文原文外文资料翻译—firms becoming publicly listed. These firms tend to have less debtin their capital structure. Fourth, as mentioned above, firms can undertake a variety of financial risk management activities. To the extent that these activities have increased over the last few decades, firms will have become less exposed to financial risk factors.We conduct some additional tests to provide a reality check of our results. First, we repeat our analysis with a reduced form model that imposes minimum structural rigidity on our estimation and find very similar results. This indicates that our results are unlikely to be driven by model misspecification. We also compare our results with trends in aggregate debt levels for all U.S. non-financial firms andfind evidence consistent with our conclusions. Finally, we look at characteristics of publicly traded non-financial firms that file for bankruptcy around the last three recessions and find evidence suggesting that these firms are increasingly being affected by economic distress as opposed to financial distress.ConclusionIn short, our results suggest that, as a practical matter, residual financial risk is now relatively unimportant for the typical U.S. firm. This raises questions about the level of expected financial distresscosts since the probability of financial distress is likely to be lower than commonly thought for most companies. For example, our results suggest that estimates of the level of systematic risk in bond pricing may be biased if they do not take into account the trend in implied financial leverage (e.g., Dichev, 1998). Our results also bring into question the appropriateness of financial models used to estimatedefault probabilities, since financial policies that may be difficult to observe appear to significantly reduce risk. Lastly, our results imply that the fundamental risks born by shareholders are primarily related to underlying economic risks which should lead to a relatively efficient allocation of capital.Some readers may be tempted to interpret our results as indicating that financial risk does not matter. This is not the proper interpretation. Instead, our results suggest that firms are able to manage financial risk so that the resulting exposure to shareholders is low compared to economic risks. Of course, financial risk is important to firms that choose to take on such risks either through high debt levels or a lack of risk management. In contrast, our study suggeststhat the typical non-financial firm chooses not to take these risks. In short, gross financial risk may be important, but firms can manage it. This contrasts with fundamental economic and business risks that 外文资料翻译—英文原文are more difficult (or undesirable) to hedge because they represent the mechanism by which the firm earns economic profits.References[1]Shyam,Sunder.Theory Accounting and Control[J].An Innternational Theory on PublishingComPany.2005[2]Ogryezak,W,Ruszeznski,A. Rom Stomchastic Dominance to Mean-Risk Models:Semide-Viations as Risk Measures[J].European Journal of Operational Research.[3] Borowski, D.M., and P.J. Elmer. An Expert System Approach to Financial Analysis: the Case of S&L Bankruptcy [J].Financial Management, Autumn.2004;[4] Casey, C.and N. Bartczak. Using Operating Cash Flow Data to Predict Financial Distress: Some Extensions[J]. Journal of Accounting Research,Spring.2005;[5] John M.Mulvey,HafizeGErkan.Applying CVaR for decentralized risk management of financialcompanies[J].Journal of Banking&Finanee.2006;[6] Altman. Credit Rating:Methodologies,Rationale and DefaultRisk[M](RiskBooks,London.译文:财务风险的重要性引言2008年的金融危机对金融杠杆的作用产生重大影响。
资本结构英文参考文献
Evaluating A Company's Capital StructureFor stock investors that favor companies with good fundamentals, a "strong" balance sheet is an important consideration for investing in a company's stock. The strength of a company' balance sheet can be evaluated by three broad categories of investment-quality measurements: working capital adequacy, asset performance and capital structure. In this article, we'll look at evaluating balance sheet strength based on the composition of a company's capital structure..A company's capitalization (not to be confused with market capitalization) describes the composition of a company's permanent or long-term capital, which consists of a combination of debt and equity. A healthy proportion of equity capital, as opposed to debt capital, in a company's capital structure is an indication of financial fitness.Clarifying Capital Structure Related TerminologyThe equity part of the debt-equity relationship is the easiest to define. In a company's capital structure, equity consists of a company's common and preferred stock plus retained earnings, which are summed up in the shareholders' equity account on a balance sheet. This invested capital and debt, generally of the long-term variety, comprises a company's capitalization, i.e. a permanent type of funding to support a company's growth and related assets.A discussion of debt is less straightforward. Investment literature often equates a company's debt with its liabilities. Investors should understand that there is a difference between operational and debt liabilities - it is the latter that forms the debt component of a company's capitalization - but that's not the end of the debt story.Among financial analysts and investment research services, there is no universal agreement as to what constitutes a debt liability. For many analysts, the debt component in a company's capitalization is simply a balance sheet's long-term debt. This definition is too simplistic. Investors should stick to a stricter interpretation of debt where the debt component of a company's capitalization should consist of the following: short-term borrowings (notes payable), the current portion of long-termdebt, long-term debt, two-thirds (rule of thumb) of the principal amount of operating leases and redeemable preferred stock. Using a comprehensive total debt figure is a prudent analytical tool for stock investors.It's worth noting here that both international and U.S. financial accounting standards boards are proposing rule changes that would treat operating leases and pension "projected-benefits" as balance sheet liabilities. The new proposed rules certainly alert investors to the true nature of these off-balance sheet obligations that have all the earmarks of debt. (To read more on liabilities, see Off-Balance-Sheet Entities: The Good, The Bad And The Ugly and Uncovering Hidden Debt.) Is there an optimal debt-equity relationship?In financial terms, debt is a good example of the proverbial two-edged sword. Astute use of leverage (debt) increases the amount of financial resources available to a company for growth and expansion. The assumption is that management can earn more on borrowed funds than it pays in interest expense and fees on these funds. However, as successful as this formula may seem, it does require that a company maintain a solid record of complying with its various borrowing commitments. (For more stories on company debt loads, see When Companies Borrow Money, Spotting Disaster and Don't Get Burned by the Burn Rate.)A company considered too highly leveraged (too much debt versus equity) may find its freedom of action restricted by its creditors and/or may have its profitability hurt as a result of paying high interest costs. Of course, the worst-case scenario would be having trouble meeting operating and debt liabilities during periods of adverse economic conditions. Lastly, a company in a highly competitive business, if hobbled by high debt, may find its competitors taking advantage of its problems to grab more market share.Unfortunately, there is no magic proportion of debt that a company can take on. The debt-equity relationship varies according to industries involved, a company's line of business and its stage of development. However, because investors are better off putting their money into companies with strong balance sheets, common sense tells us that these companies should have, generally speaking, lower debt and higher equitylevels.Capital Ratios and IndicatorsIn general, analysts use three different ratios to assess the financial strength of a company's capitalization structure. The first two, the so-called debt and debt/equity ratios, are popular measurements; however, it's the capitalization ratio that delivers the key insights to evaluating a company's capital position.The debt ratio compares total liabilities to total assets. Obviously, more of the former means less equity and, therefore, indicates a more leveraged position. The problem with this measurement is that it is too broad in scope, which, as a consequence, gives equal weight to operational and debt liabilities. The same criticism can be applied to the debt/equity ratio, which compares total liabilities to total shareholders' equity. Current and non-current operational liabilities, particularly the latter, represent obligations that will be with the company forever. Also, unlike debt, there are no fixed payments of principal or interest attached to operational liabilities.The capitalization ratio (total debt/total capitalization) compares the debt component of a company's capital structure (the sum of obligations categorized as debt + total shareholders' equity) to the equity component. Expressed as a percentage, a low number is indicative of a healthy equity cushion, which is always more desirable than a high percentage of debt. (To continue reading about ratios, see Debt Reckoning.)Additional Evaluative Debt-Equity ConsiderationsCompanies in an aggressive acquisition mode can rack up a large amount of purchased goodwill in their balance sheets. Investors need to be alert to the impact of intangibles on the equity component of a company's capitalization. A material amount of intangible assets need to be considered carefully for its potential negative effect as a deduction (or impairment) of equity, which, as a consequence, will adversely affect the capitalization ratio. (For more insight, read Can You Count On Goodwill? and The Hidden Value Of Intangibles.)Funded debt is the technical term applied to the portion of a company's long-termdebt that is made up of bonds and other similar long-term, fixed-maturity types of borrowings. No matter how problematic a company's financial condition may be, the holders of these obligations cannot demand payment as long the company pays the interest on its funded debt. In contrast, bank debt is usually subject to acceleration clauses and/or covenants that allow the lender to call its loan. From the investor's perspective, the greater the percentage of funded debt to total debt disclosed in the debt note in the notes to financial statements, the better. Funded debt gives a company more wiggle room. (To read more on financial statement footnotes, see Footnotes: Start Reading The Fine Print.)Lastly, credit ratings are formal risk evaluations by credit-rating agencies - Moody's, Standard & Poor's, Duff & Phelps and Fitch –of a company's ability to repay principal and interest on debt obligations, principally bonds and commercial paper. Here again, this information should appear in the footnotes. Obviously, investors should be glad to see high-quality rankings on the debt of companies they are considering as investment opportunities and be wary of the reverse.ConclusionA company's reasonable, proportional use of debt and equity to support its assets is a key indicator of balance sheet strength. A healthy capital structure that reflects a low level of debt and a corresponding high level of equity is a very positive sign of investment quality.To continue learning about financial statements, read What You Need To Know About Financial Statements and Advanced Financial Statement Analysis.。
外文翻译--资本结构影响因素的分析研究
中文3160字1 外文翻译原文Capital structure influencing factor analysis research Material Source:Theory of Optimal Capital StructureAuthor : R. BareaSince the Modigliani and Miller (1958) since the academic structure of the capital a large number of theoretical and empirical research, trying to identify the potential impact of capital structure choice factors. A lot of literature suggests that the choice of capital structure by the asset structure, firm size, non-debt tax shields, growth, volatility, product uniqueness, profitability and other firm characteristics factors. In addition, the choice of capital structure is also affected by industry characteristics, macroeconomic and institutional environment factors. Harris and Raviv (1991) from the experience of many U.S. companies to sum up: "leverage ratio of fixed assets, non-debt tax shields, growth and company size increases, with the volatility, advertising costs, bankruptcy the possibility of profitability and product uniqueness increases less. "Chinese listed companies due to the particularity of the system, what factors determine the choice of capital structure? Characteristics of institutional factors influenced how the company capital structure choice? Experiences and things like that to be the model and empirical test. In recent years, researchers began to affect the capital structure of listed companies in an empirical study of factors, such as Lu Zhengfei, and Xin Yu (1998), Lishan Min and Su Yun (1999), Xiaozuo Ping and Wu Shinong (2002), and achieved certain results, However, most studies are using a simple regression technique factors on capital structure for empirical analysis. Titman and Wessels (1988) pointed out the shortcomings of this approach: First, there is no wish to measure the sole representative of the property; Second, it is difficult to find and other relevant property is not related to the measurement of a particular property; third, As can be observed variable is not perfectly representative of its properties should be measured, they are used in the regression analysis will lead to errors in variable problem; fourth, the agent variables and measurement error 2 may be explained by variables related to measurement error will produce false (Spurious) related. In this paper, two-stage multiple procedures, application of factor analysis-based model to reduce measurement error, to expand the capital structure of Chinese listed companies Empirical Study.Capital StructureTo build the empirical model, the author according to the capital structure theory and relevant empirical research on factors affecting capital structure analysis, and gives a proxy variable to capture these factors.I, the asset structure Agency theory, balance theory and the theory of asymmetric information are considered assets for capital structure choice. According to agency theory, high-leverage the company's shareholders tend to sub-optimal investment (Jensen and Meckling, 1976; Myers, 1977). The assets of the company secured an opportunity to limit such behavior. Therefore, the value of assets and leverage are related to security. Another problem comes from a proxy service managers tend to consumption. Assets can be secured with fewer companies more vulnerable to such agency costs, because these companies on the capital expenditure monitoring more difficult (Grossman and Hart, 1982). Companies can increase the level of debt as a monitoring tool to mitigate this problem. Therefore, security assets and leverage can be negative. Theory from the balance with debt secured creditors to reduce the potential loss of the debtor's insolvency and, therefore, limit the amount of shareholder wealth, occupation of the debtor. Meanwhile, in bankruptcy the value of tangible assets higher than the value of intangible assets. Therefore, the value of assets and leverage are related to security. Under asymmetric information theory, tangible assets, more businesses will face less information asymmetry, therefore, should issue equity rather than debt. And the existence of asymmetric information, to the sale of secured debt had a negative because it reduces information premium. For asset structure, we use stock / total assets (INV) and fixed assets / total assets (FIX) two proxy variables.II, firm size Many studies suggest that large companies tend to diversify, with more stable cash flow, so low probability of bankruptcy. Warner (1997), Angclua and Meconnel (1982) study found that direct costs of financial distress and negatively related to firm size. Fama and Jensen (1983) that large corporations to smaller companies tend to provide more information on lenders. Therefore, less monitoring costs of large 3 companies, large companies than small companies with high borrowing capacity. Therefore, firm size should be positively correlated with leverage. And Rajan and Zingales (1995) that the large companies than small companies tend to provide more information to the public, may be related to internal investment company size and level of external investment in human negative correlation of asymmetric information. Under asymmetric information theory, large companies should be inclined to equity financing and therefore havelower leverage. The size of the company, we use the natural logarithm of total assets (LN (TA)) and the main business income of the natural logarithm (LN (S)) of two proxy variables.III, the tax That the use of tax-based model of the main benefits of debt financing is tax credits. According to tax-based theory, companies with higher marginal tax rates should use more debt to get the tax shield benefits. Therefore, the effective marginal tax rates should be positively correlated with leverage. Unable to obtain relevant data to calculate the marginal tax rate, we use the average tax rate (TAX) to analyze the tax impact of capital structure choice.IV, non-debt tax shield DeAngelo and Masulis (1980) that non-debt tax shield can be used as an alternative to debt financing, tax benefits, the same as in other cases, the non-debt tax shields have more companies should use less debt. Barton et al (1989), Prowse (1990), Wald (1999), Kim and Sorensen (1986) research shows that non-debt tax shields and leverage negative. In this paper, depreciation / total assets as non-debt tax shield (DEP) of the proxy variables.V. Growth According to agency theory, equity-controlled companies tend to sub-optimal investment will be deprived of their wealth came from the hands of creditors. For high growth companies, because of its future investment opportunities in the choice of greater flexibility, these companies may be more serious agency problems. Myers (1977) that high growth companies lower the future investment in growth companies have more options. If the high-growth companies need external equity financing options to implement in the future, then the company has a large debt may give up this opportunity, because such investment will transfer wealth from shareholders to creditors of the body, which produces the problem of insufficient investment. Therefore, growth should be negatively correlated with leverage. For growth, this growth rate with total assets (GRTA) and the equity value-added rate (GREQ) two 4 proxy variables.VI, volatility Regular payment of debt obligations involved, the highly leveraged company is more vulnerable to financial distress costs. Finance theory suggests that the risk of the company or bankrupt companies should not have a high probability of higher leverage. Therefore, the main business income volatility or commercial risk as the possibility of occurrence of financial distress proxy variables, which should be negatively correlated with leverage. Bradley et al (1984), Titman and Wesssels (1988), Wald (1999) and Booth et al (2001) and other studies have shown that volatility negatively correlated with leverage. In this paper, the main business of the standards slip ((VOL) as a proxy for volatility.VII ability to generate internal resources Trade-off theory is that ability to generate internal resources to leverage a positive correlation, because a strong ability to generate internal resources, companies choose higher leverage to get more debt tax shield. Jensen (1986) pointed out that instead of borrowing to pay dividends to ensure that the management discipline empire method. The benefits of debt "can improve the efficiency of managers and their organizations", which act as a "control effect" role. Therefore, the company has a large free cash flow should have higher debt to limit management's discretion. According to the Theory of Optimal Financing (Pecking order theory), because the existence of asymmetric information, the company follows the financial pecking order model: companies prefer internal resources, internal resources have been exhausted if the company was to issue debt, and finally the issue of equity. Therefore, the ability to generate internal resources, negatively correlated with leverage. The ability to generate internal resources, this paper, the cash rate of sale (NOCFS) and total assets of cash recovery rate (NOCFA) two proxy variables, but to test the Jensen (1986) free cash flow hypothesis proposed in this paper with a cash rate of sales / total Asset growth rate (FCFS) and total assets of cash recovery rate / total assets growth rate (FCFA), as free cash flow (Note: free cash flow is difficult to quantify, can not be obtained directly from the financial data, must be used in other empirical research cash flow concept, and in line with the growth of the company (such as Tobin'Q, growth rate of total assets), investment opportunities, free cash flow and other indicators in order to explain the problem.) proxy variables.VIII, product uniqueness 5 From the stakeholder theory of capital structure and product / factor market theory perspective, the company has a unique product should have less leverage. Titman and Wessels (1988) that, in liquidation, the production of unique or specialized products company, its customers, suppliers, workers will suffer from higher costs. Their workers and suppliers may have the skills and capital, job characteristics, and the customer service more difficult to find a replacement phase. From the agency cost perspective, the expected cost of employees looking for work products and services depends on whether there is unique. Employees working on the implementation of mass-specific work with respect to employees engaged in the former expected to find lower cost. Therefore, when other conditions being equal, and human-related costs for the agency to provide specialized products and services relative to the companies higher. Due to higher leverage will have higher agency costs and bankruptcy costs, sothe uniqueness of products and services will affect the degree of capital structure choice. These companies promote their unique products will suffer more sales costs and advertising costs. In this paper, operating expenses / Income from principal operations (SEXP) as a proxy for product uniqueness.IX liquidity Current ratio of capital structure choice is mixed. On the one hand, high flow rate paid by the company short-term debt due ability. Therefore, liquidity should be positively correlated with leverage. On the other hand, companies with more liquid assets may use these assets to finance its investments. Therefore, the flow of state assets would negatively affect leverage. And, as Prowse (1990) points out, can be used to indicate the liquidity of the assets to creditors, the interests of shareholders to manipulate the expense of the extent of these assets. In this paper, the current ratio (CR) and the quick ratio (QR) as a proxy for liquidity.Ten, industry characteristics The asset risk, asset type, and the demand for external funds vary by industry, the average leverage will vary with the industry. Industry characteristics and capital structure characteristics of the fact that the leverage within the same industry in different sectors of the lever more than the similar, leverage levels to remain relatively the same industry (Bowen et al, 1982; Bradley et al 1984). Bradley et al (1984) studies have shown that regulated industries (telecommunications, electronics, utilities and aviation industry) with higher leverage. This article uses the industry dummy variables to control the impact of industry factors on the lever.2、译文资本结构影响因素的分析研究资料来源: 最优资本结构原理作者: 巴里亚自Modigliani 和Miller(1958) 以来，学术界对资本结构进行了大量的理论和实证研究，试图辨别影响资本结构选择的潜在因素。
资本结构、股权结构与公司绩效外文翻译
资本结构、股权结构与公司绩效外文翻译中文2825字1868单词外文文献：Capital structure, equity ownership and firm performanceDimitris Margaritis, Maria Psillaki 1Abstract：This paper investigates the relationship between capital structure, ownership structure and firm performance using a sample of French manufacturing firms. We employ non-parametric data envelopment analysis (DEA) methods to empirically construct the industry’s ‘best practice’frontier and measure firm efficiency as the distance from that frontier. Using these performance measures we examine if more efficient firms choose more or less debt in their capital structure. We summarize the contrasting effects of efficiency on capital structure in terms of two competing hypotheses: the efficiency-risk and franchise value hypotheses. Using quantile regressions we test the effect of efficiency on leverage and thus the empirical validity of the two competing hypotheses across different capital structure choices. We also test the direct relationship from leverage to efficiency stipulated by the Jensen and Meckling (1976) agency cost model. Throughout this analysis we consider the role of ownership structure and type on capital structure and firm performance.Firm performance, capital structure and ownershipConflicts of interest between owners-managers and outside shareholders as well as those between controlling and minority shareholders lie at the heart of the corporate governance literature (Berle and Means, 1932; Jensen and Meckling, 1976;Shleifer and Vishny, 1986). While there is a relatively large literature on the effects of ownership on firm performance (see for example, Morck et al., 1988; McConnell and Servaes, 1990; Himmelberg et al., 1999), the relationship between ownership structure and capital structure remains largely unexplored. On the other hand, a voluminous literature is devoted to capital structure and its effects on corporate performance –see the surveys by Harris and Raviv (1991) and Myers (2001). An emerging consensus that comes out of the corporate governance literature (see Mahrt-Smith, 2005) is that the interactions between capital structure and ownership structure impact on firm values. Yet theoretical arguments alone cannot unequivocally predict these relationships (see Morck et al., 1988) and the empirical evidence that we have often appears to be contradictory. In part these conflicting results arise from difficulties empirical researchers face in obtaining direct measures of the magnitude of agency costs that are not confounded by factors that are beyond the control of management (Berger and Bonaccorsi di Patti, 2006). In the remainder of this section we briefly review the literature in this area focusing on the main hypotheses of interest for this study.Firm performance and capital structureThe agency cost theory is premised on the idea that the interests of the company’s managers and its shareholders are not perfectly aligned. In their seminal paper Jensen and Meckling (1976) emphasized the importance of the agency costs of equity arising from the separation of ownership and control of firms whereby managers tend to maximize their own utility rather than the value of the firm. These conflicts may occur in situations where managers have incentives to take1来源：Journal of Banking & Finance , 2010 (34) : 621–632，本文翻译的是第二部分excessive risks as part of risk shifting investment strategies. This leads us to Jensen’s (1986) “free cash flow theory”where as stated by Jensen (1986, p. 323) “the pro blem is how to motivate managers to disgorge the cash rather than investing it below the cost of capital or wasting it on organizational inefficiencies.”Thus high debt ratios may be used as a disciplinary device to reduce managerial cash flow waste through the threat of liquidation (Grossman and Hart, 1982) or through pressure to generate cash flows to service debt (Jensen, 1986). In these situations, debt will have a positive effect on the value of the firm.Agency costs can also exist from conflicts between debt and equity investors. These conflicts arise when there is a risk of default. The risk of default may create what Myers (1977) referred to as an“underinvestment”or “debt overhang”problem. In this case, debt will have a negative effect on the value of the firm. Building on Myers (1977) and Jensen (1986), Stulz (1990) develops a model in which debt financing is shown to mitigate overinvestment problems but aggravate the underinvestment problem. The model predicts that debt can have both a positive and a negative effect on firm performance and presumably both effects are present in all firms. We allow for the presence of both effects in the empirical specification of the agency cost model. However we expect the impact of leverage to be negative overall. We summarize this in terms of our first testable hypothesis. According to the agency cost hypothesis (H1) higher leverage is expected to lower agency costs, reduce inefficiency and thereby lead to an improvement in firm’s performance.Reverse causality from firm performance to capital structure But firm performance may also affect the choice of capital structure. Berger and Bonaccorsi di Patti (2006) stipulate that more efficient firms are more likely to earn a higher return for a given capital structure, and that higher returns can act as a buffer against portfolio risk so that more efficient firms are in a better position to substitute equity for debt in their capital structure. Hence under the efficiency-risk hypothesis (H2), more efficient firms choose higher leverage ratios because higher efficiency is expected to lower the costs of bankruptcy and financial distress. In essence, the efficiency-risk hypothesis is a spin-off of the trade-off theory of capital structure whereby differences in efficiency, all else equal, enable firms to fine tune their optimal capital structure.It is also possible that firms which expect to sustain high efficiency rates into the future will choose lower debt to equity ratios in an attempt to guard the economic rents or franchise value generated by these efficiencies from the threat of liquidation (see Demsetz, 1973; Berger and Bonaccorsi di Patti, 2006). Thus in addition to a equity for debt substitution effect, the relationship between efficiency and capital structure may also be characterized by the presence of an income effect. Under the franchise-value hypothesis (H2a) more efficient firms tend to hold extra equity capital and therefore, all else equal, choose lower leverage ratios to protect their future income or franchise value.Thus the efficiency-risk hypothesis (H2) and the franchise-value hypothesis (H2a) yield opposite predictions regarding the likely effects of firm efficiency on the choice of capital structure. Although we cannot identify the separate substitution andincome effects our empirical analysis is able to determine which effect dominates the other across the spectrum of different capital structure choices.Ownership structure and the agency costs of debt and equity.The relationship between ownership structure and firm performance dates back to Berle andMeans (1932) who argued that widely held corporations in the US, in which ownership of capital is dispersed among small shareholders and control is concentrated in the hands of insiders tend to underperform. Following from this, Jensen and Meckling (1976) develop more formally the classical owner-manager agency problem. They advocate that managerial share-ownership may reduce managerial incentives to consume perquisites, expropriate shareholders’wealth or to engage in other sub-optimal activities and thus helps in aligning the interests of managers and shareholders which in turn lowers agency costs. Along similar lines, Shleifer and Vishny (1986) show that large external equity holders can mitigate agency conflicts because of their strong incentives to monitor and discipline management.In contrast Demsetz (1983) and Fama and Jensen (1983) point out that a rise in insider share-ownership stakes may also be associated with adverse ‘entrenchment’effects tha t can lead to an increase in managerial opportunism at the expense of outside investors. Whether firm value would be maximized in the presence of large controlling shareholders depends on the entrenchment effect (Claessens et al., 2002; Villalonga and Amit, 2006; Dow and McGuire, 2009). Several studies document either a direct (e.g., Shleifer and Vishny, 1986; Claessens et al., 2002; Hu and Zhou, 2008) or a non-monotonic (e.g., Morck et al., 1988;McConnell and Servaes, 1995; Davies et al., 2005) relationship between ownership structure and firm performance while others (e.g., Demsetz and Lehn, 1985; Himmelberg et al., 1999; Demsetz and Villalonga, 2001) find no relation between ownership concentration and firm performance.Family firms are a special class of large shareholders with unique incentive structures. For example, concerns over family and business reputation and firm survival would tend to mitigate the agency costs of outside debt and outside equity (Demsetz and Lehn, 1985; Anderson et al., 2003) although controlling family shareholders may still expropriate minority shareholders (Claessens et al., 2002; Villalonga and Amit, 2006). Several studies (e.g., Anderson and Reeb, 2003a; Villalonga and Amit, 2006; Maury, 2006; King and Santor, 2008) report that family firms especially those with large personal owners tend to outperform non-family firms. In addition, the empirical findings of Maury (2006) suggest that large controlling family ownership in Western Europe appears to benefit rather than harm minority shareholders. Thus we expect that the net effect of family ownership on firm performance will be positive.Large institutional investors may not, on the other hand, have incentives to monitor management (Villalonga and Amit, 2006) and they may even coerce with management (McConnell and Servaes, 1990; Claessens et al., 2002; Cornett et al., 2007). In addition, Shleifer and Vishny (1986) and La Porta et al. (2002) argue that equity concentration is more likely to have a positive effect on firm performance in situations where control by large equity holders may act as a substitute for legal protection in countries with weak investor protection and less developed capital markets where they also classify Continental Europe.We summarize the contrasting ownership effects of incentive alignment and entrenchment on firm performance in terms of two competing hypotheses. Under the ‘convergence-of-interest hypothesis’(H3) more concentrated ownership should have a positive effect on firm performance. And under the ownership entrenchment hypothesis (H3a) the effect of ownership concentration on firm performance is expected to be negative.The presence of ownership entrenchment and incentive alignment effects also has implications for the firm’s capital structure choice. We assess these effects empirically. As external blockholders have strong incentives to reduce managerial opportunism they may prefer to use debtas a governance mechanism to control management’s consumption of perquisites (Grossman and Hart, 1982). In that case firms with large external blockholdings are likely to have higher debt ratios at least up to the point where the risk of bankruptcy may induce them to lower debt. Family firms may also use higher debt levels to the extent that they are perceived to be less risky by debtholders (Anderson et al., 2003). On the other hand the relation between leverage and insider share-ownership may be negative in situations where managerial blockholders choose lower debt to protect their non-diversifiable human capital and wealth invested in the firm (Friend and Lang, 1988). Brailsford et al. (2002) report a non-linear relationship between managerial share-ownership and leverage. At low levels of managerial ownership, agency conflicts necessitate the use of more debt but as managers become entrenched at high levels of managerial ownership they seek to reduce their risks and they use less debt. Anderson and Reeb (2003) find that insider ownership by managers or families has no effect on leveragewhile King and Santor (2008) report that both family firms and firms controlled by financial institutions carry more debt in their capital structure.外文翻译：资本结构、股权结构与公司绩效摘要：本文通过对法国制造业公司的抽样调查，研究资本结构、所有权结构和公司绩效的关系。
中英文外文文献翻译资本结构理论与企业资本结构优化
本科毕业设计（论文）中英文对照翻译(此文档为word格式,下载后您可任意修改编辑!)文献出处:Ashkanasy N M. The study on capital structure theory and the optimization of enterprise capital [J]. Journal of Management, 2016, 5(3): 235-254.原文The study on capital structure theory and the optimization ofenterprise capital structureAshkanasy N MAbstractIn this paper, corporate finance is an important content of modern enterprise management decision. Around the existence of optimal capitalstructure has been a lot of controversy. Given investment decisions, whether an enterprise to change its value by changing the capital structure and the cost of capital, namely whether there is a market make the enterprise value maximization, or make the enterprise capital structure of minimizing the cost of capital? To this problem has different answers in different stages of development, has formed many theory of capital structure.Key words: Capital structure; financial structure; Optimization; Financial leverage1 IntroductionIn financial theory, capital structure due to the different understanding of "capital" in the broad sense and narrow sense two explanations: one explanation is that the "capital" as all funding sources, the structure of the generalized capital structure refers to the entire capital, the relationship between the contrast of their own capital and debt capital, as the American scholar Alan c. Shapiro points out that "the company's capital structure - all the debt and equity financing; an alternative explanation is that if the" capital "is defined as a long-term funding sources, capital structure refers to the narrow sense of their own capital and long-term debt capital, and the tension and the short-term debt capital as the business capital management. Whether it is a broad concept ornarrow understanding of the capital structure is to discuss the proportion of equity capital and debt capital relations. 2 The capital structure theory Capital structure theory has experienced a process of gradually forming, developing and perfecting. First proposed the theory of American economist David Durand (David Durand) thinks that enterprise's capital structure is in accordance with the method of net income, net operating income method and traditional method, in 1958 di Gayle Anne (Franco Modigliani and Miller (Mertor Miller) and put forward the famous MM theory, created the modern capital structure theory, on this basis, the later generations and further put forward many new theory: 2.1 Net Income Theory (Net Income going) Net income theory on the premise of two assumptions --, investors with a fixed proportion of investment valuation or enterprise's net income. Enterprises to raise debt funds needed for a fixed rate. Therefore, the theory is that: the enterprise use of debt financing is always beneficial, can reduce the comprehensive cost of capital of enterprise. This is because the debt financing in the whole capital of enterprise, the bigger the share, the comprehensive cost of capital is more c lose to the cost of debt, and because the cost of debt is generally low, so, the higher the debt level, comprehensive capital cost is lower, the greater the enterprise value. When the debt ratio reached 100%, the firm will achieve maximum value.2.2 Theory of Net Operating Income (Net Operating Income going) Netoperating income theory is that, regardless of financial leverage, debt interest rates are fixed. If enterprises increase the lower cost of debt capital, but even if the cost of debt remains unchanged, but due to the increased the enterprise risk, can also lead to the rising cost of equity capital, it a liter of a fall, just offset, the enterprise cost of capital remain unchanged. Is derived as a result, the theory "" does not exist an optimal capital structure of the conclusion.2.3 Traditional Theory (Traditional going) Traditional theory is that the net income and net operating income method of compromise. It thinks, the enterprise use of financial leverage although will lead to rising cost of equity, but within limits does not completely offset the benefits of using the low cost of debt, so can make comprehensive capital cost reduction, increase enterprise value. But once exceed this limit, rights and interests of the rising cost of no longer can be offset by the low cost of debt, the comprehensive cost of capital will rise again. Since then, the cost of debt will rise, leading to a comprehensive capital costs rise more rapidly. Comprehensive cost of capital from falling into a turning point, is the lowest, at this point, to achieve the optimal capital structure. The above three kinds of capital structure theory is referred to as "early capital structure theory", their common features are: three theories are in corporate and personal income tax rate is zero under the condition of the proposed. Three theories and considering the capital structure of the dual effects of the cost of capital and enterprise value.Three theories are prior to 1958. Many scholars believe that the theory is not based on thorough analysis.3 Related theories3.1 Balance TheoryIt centered on the MM theory of modern capital structure theory development to peak after tradeoff theory. Trade-off theory is based on corporate MM model and miller, revised to reflect the financial pinch cost (also known as the financial crisis cost) and a model of agent cost.(1) the cost of financial constraints. Many enterprises always experience of financial constraints, some of them will be forced to go bankrupt. When the financial constraints but also not bankruptcy occurs, may appear the following situation: disputes between owners and creditors often leads to inventory and fixed assets on the material damaged or obsolete. Attorney fees, court fees and administrative costs to devour enterprise wealth, material loss and plus the legal and administrative expenses referred to as the "direct costs" of bankruptcy. Financial pinch will only occur in business with debt, no liability companies won't get into the mud. So with more debt, the fixed interest rate, and the greater the profitability of the probability of large leading to financial constraints and the cost of the higher the probability of occurrence. Financial pinch probability high will reduce the present value of the enterprise, to improve the cost ofcapital.(2) the agency cost. Because shareholders exists the possibility of using a variety of ways from the bondholders who benefit, bonds must have a number of protective constraint clauses. These terms and conditions in a certain extent constrained the legal management of the enterprise. Also must supervise the enterprise to ensure compliance with these terms and conditions, the cost of supervision and also upon the shareholders with higher debt costs. Supervise cost that agency cost is will raise the cost of debt to reduce debt interest. When the tax benefits and liabilities of financial constraints and agency costs when balance each other, namely the costs and benefits offset each other, determine the optimal capital structure. Equilibrium theory emphasizes the liabilities increase will cause the risk of bankruptcy and rising costs, so as to restrict the enterprise infinite pursuit of the behavior of tax preferential policies. In this sense, the enterprise the best capital structure is the balance of tax revenue and financial constraints caused by all kinds of costs as a result, when the marginal debt tax shield benefit is equal to the marginal cost of financial constraints, the enterprise value maximum, to achieve the optimal capital structure.3.2 Asymmetric Information TheoryAsymmetric Information and found)Due to the trade-off theory has long been limited to bankruptcy cost and tax benefit both conceptual framework, to the late 1970 s, the theory is centered on asymmetricinformation theory of new capital structure theory. So-called asymmetric information is in the information management and investors are not equal, managers than investors have more and more accurate information, and managers try to existing shareholders rather than new seeks the best interests of shareholders, so if business prospect is good, the manager will not issue new shares, but if the prospects, will make the cost of issuing new shares to raise too much, this factor must be considered in the capital structure decision. The significance of these findings to the enterprise's financial policy lies in: first it prompted enterprise reserve a certain debt capacity so as to internal lack of funding for new investment projects in the future debt financing. In addition, in order to avoid falling stock prices, managers often don't have to equity financing, and prefer to use external funding. The central idea is: internal financing preference, if you need external finance, preferences of creditor's rights financing. Can in order to save the ability to issue new debt at any time, the number of managers to borrow is usually less than the number of enterprises can take, in order to keep some reserves. Ross (s. Ross) first systematically introduce the theory of asymmetric information from general economics enterprise capital structure analysis, then, tal (e. Talmon), haeckel (Heikel) development from various aspects, such as the theory. After the 1980 s, thanks to the new institutional economics, and gradually formed a financial contract theory, corporate governance structure theory of capitalstructure theory, both of which emphasize enterprise contractual and incomplete contract, financial contract theory focuses on the design of optimal financial contract, and the arrangement of enterprise governance structure theory focuses on the right, focuses on the analysis of the relationship between capital structure and corporate governance.4 the capital structure theory of adaptability analysis On the one hand, capital structure theory especially the theory of modern capital structure is the important contribution is not only put forward "the existence of the optimal capital structure" this financial proposition, and that the optimal combination of the capital structure, objectively and make us on capital structure and its influence on the enterprise value have a clear understanding. The essence of these theories has direct influence and infiltrate into our country financial theory, and gives us enlightenment in many aspects: Because of various financing way, channel in financing costs, risks, benefits, constraints, as well as differences, seeking suitable capital structure is the enterprise financial management, especially the important content of financing management, must cause our country attaches great importance to the financial theory and financial practice. Capital structure decision despite the enterprise internal and external relationships and factor of restriction and influence, but its decision-making is the enterprise, the enterprise to the factors related to capital structure and the relationship between the quantitativeand qualitative analysis, discusses some principles and methods of enterprise capital structure optimization decision. Any enterprise capital structure in the design, all should leave room, maintain appropriate maneuver ability of financing, the financing environment in order to cope with the volatility and deal with unexpected events occur at any time. In general, businesses leverage ratio is high, has an adverse effect on the whole social and economic development, easily led to the decrease of the enterprise itself the economic benefits and losses and bankruptcies, deepen the entire social and economic development is not stable, increase the financial burden, cause inflation, not conducive to the transformation of industrial structure, and lower investment efficiency. Therefore, the enterprise capital structure should be in accordance with the business owners, creditors, and the public can bear the risk of the society in different aspects.译文资本结构理论与企业资本结构优化Ashkanasy N M摘要企业融资是现代企业经营决策的一项重要内容。
中小企业资本结构论文中英文对照资料外文翻译文献
中⼩企业资本结构论⽂中英⽂对照资料外⽂翻译⽂献中英⽂对照资料外⽂翻译⽂献表1报告的是解释变量的描述性统计。
在本报告所述期间，在越南中⼩型企业的平均资产负债率约为43.91％。
然⽽，在样品的资产负债率变化很⼤，从最⼤负债⽐率为97.25％，最低4.95％。
随着债务到期，我们发现，⼤部分的中⼩型企业相⽐长期债务雇⽤更多的短期负债，以资助其运作。
平均短期负债⽐率约为41.98％，⽽长期债务⽐率仅为1.93％。
短期负债的中⼩企业多种多样，如商业银⾏贷款，贸易信贷从供应商，客户的预付款，借款的朋友或亲戚，以及⼀些其他来源的。
其他短期负债⽐率，代表⼤多来⾃⽹络，账户融资的总资产的⽐例相对较⾼（24.62％）。
显然，对中⼩型企业的资本结构，资⾦来源从原⽂：Capital Structure in Small andMedium-sized EnterprisesThe Case of VietnamTran Dinh Khoi Nguyen and Neelakantan RamachandranAbstract:The objective of this article is to identify the determinants influencing the capital structure of small and medium-sized enterprises (SMEs) in Vietnam. Empirical results show that SMEs employ mostly short-term liabilities to finance their operations. A firm’s ownership also affects the way a SME finances its operations. The capital structure of SMEs in Vietnamis positively related to growth, business risk, firm size, networking, and relationships with banks; but negatively related to tangibility. Profitability seems to have no significant impact ton the capital structure of Vietnamese SMEs. The strong impact of such determinants as firm ownership, firm size, relationships with banks, and networking reflects the asymmetric features of the fund mobilization process in a transitional economy like that of Vietnam.Key words: SMEs, capital structure, leverage, banking relationships1 IntroductionVietnam has been changing to a market-oriented economy over the past eighteen years, and there is growing recognition of SMEs’ importance in the transitional economy. Consequently, the Government has introduced numerous policies in order to support this important business sector. According to recent statistics, 96 per cent of registered firms are classified as small and medium-sized firms, of which private SMEs account for nearly 82 per cent. The small business sector in Vietnam also generates 25 per cent of annual GDP. However, SMEs still face the difficult issue of access to capital for future development (Doanh and Pentley 1999). This raises a question as to what factors influence the capital structure of Vietnamese SMEs —an important concern in improving financial policies to support the small business sector. There are only a limited number of studies on factors influencing capital structure among Vietnamese firms.As for similar studies in other countries, most empirical evidence on capital structure tends to focus on large firms in developed countries Only in recent years have a few studies examinedthese issues either in developing countries or among small firms A review of empirical studies on the capital structure of SMEs helped us to identify some key issues. Not all determinants are consistent with those predictions advanced by theories of finance. Indeed, there are some contrary results on the relationship between some determinants and capital structure among firms in some countries In addition, the firm characteristics are often at the centre in most empirical studies, while the effects of managers’ behaviour have seldom been examined. In a qualitative piece of research, Michaelas, Chittenden, and Pitziouris (1998) argued that owners’ behaviour, in conjunction with internal and external factors, will determine capital structure decisions. This requires further quantitative studies to examine what factors influence capital structure in the small business sector in developing countries. Based on such gaps in the existing literature, this paper attempts to study features of the capital structure of Vietnamese SMEs, over the period 1998–2001, and examine the influence of specific determinants on SMEs’ capital structure. This study has combined data from financial statements and questionnaires given to SMEs’ financial managers to explore how Vietnamese SMEs finance their operations. The study examines such determinants as growth, tangibility, business risk, profitability, size, ownership, relationship with banks, and networking on three measures of capital structure.2 Literature Review and HypothesesCapital structure is defined as the relative amount of debt and equity used to finance a firm. Theories explaining capital structure and the variation of debt ratios across firms range from the irrelevance of capital structure, proposed by Modigliani and Miller (1958), to a host of relevance theories. If leverage can increase a firm’s value in the MM tax model (Modigliani and Miller 1963; Miller 1977), firms have to trade off between the costs of financial distress, agency costs (Jensen and Meckling 1976) and tax benefits, so as to have an optimal capital structure. However, asymmetric information and the pecking order theory (Myers and Majluf 1984; Myers 1984) state that there is no well defined target debt ratio. The latter model suggests that there tends to be a hierarchy in firms’preferences for financing: first using internally available funds, followed by debt, and finally external equity. These theories identify a large number of attributes influencing a firm’s capital structure.Although the theories have not considered firm size, this section will attempt to apply the theories of capital structure in the small business sector, anddevelop testable hypotheses that examine the determinants of capital structure in Vietnamese SMEs.2.1 Firm GrowthWe think that this proposition is more relevant in the context of the small business sector in Vietnam, where there was a scarcity of long-term credits in the period 1998–2001 (ADB 2002). In addition, as most SMEs in Vietnam operate in the trading and service sectors, demand for new investment in fixed assets are relatively low. Doanh and Pentley (1999) also argued that Vietnamese SMEs often look for short-term bank loans or other resources from relatives, friends or suppliers to finance their operations. Taking percentage change in total assets as a measure of firm’s growth, we hypothesize that:A firm’s growth will be positively related to debt ratios.2.2 Business RiskAccording to the theory of financial distress, higher business risk increases the probability of financial distress, so firms have to trade off between tax benefits and bankruptcy costs. Thus, it predicts a negative relationship between business risk and leverage. In the context of the small business sector, Queen and Roll (1987) argue that SMEs are likely to have a higher level of business risk, relative to large firms. Therefore, we propose the hypothesis:Business risk will be negatively related to debtratios.2. 3 Firm OwnershipThe role of state ownership is still a controversial topic in Vietnam’s reform process. As noted above, the Vietnamese financial system is characterized by a bank-based system where SOCBs1 dominate and provide the bulk of loans in the economy (ADB 2002). Soo (1999) also pointed out that most SOCB credits are channeled to SOEs. It can be validly argued that state-owned SMEs have their own advantages over private SMEs in accessing credit from SOCBs. The plausible explanation for this argument is that state-owned SMEs have long-lasting ties with commercial banks from the pre-reform era. Because they are state-owned, SOCBs’ policies favour the state business sector, as compared to the private business sector, notably in terms of interest rates, banking procedures, and collateral requirements. Therefore, it could be expected that state-owned SMEs have more opportunities to access bank loans. Based on this argument, we hypothesize that: State-owned SMEs will employ more debt than private SMEs.。
资本结构中英文对照外文翻译文献
中英文对照外文翻译(文档含英文原文和中文翻译)The effect of capital structure on profitability : an empirical analysis of listed firms in Ghana IntroductionThe capital structure decision is crucial for any business organization. The decision is important because of the need to maximize returns to various organizational constituencies, and also because of the impact such a decision has on a firm’s ability to deal with its competitive environment. The capital structure of a firm is actually a mix of different securities. In general, a firm can choose among many alternative capital structures. It can issue a large amount of debt or very little debt. It can arrange lease financing, use warrants, issue convertible bonds, sign forward contracts or trade bond swaps. It can issue dozens of distinct securities in countless combinations; however, it attempts to find the particular combination that maximizes its overall market value.A number of theories have been advanced in explaining the capital structure of firms. Despite the theoretical appeal of capital structure, researchers in financial management have not found the optimal capital structure. The best that academics and practitioners have been able to achieve are prescriptions that satisfy short-term goals. For example, the lack of a consensus about what would qualify as optimal capital structure has necessitated the need for this research. A better understanding of the issues at hand requires a look at the concept of capital structure and its effect on firm profitability. This paper examines the relationship between capital structure and profitability of companies listed on the Ghana Stock Exchange during the period 1998-2002. The effect of capital structure on the profitability of listed firms in Ghana is a scientific area that has not yet been explored in Ghanaian finance literature.The paper is organized as follows. The following section gives a review of the extant literature on the subject. The next section describes the data and justifies the choice of the variables used in the analysis. The model used in the analysis is then estimated. The subsequent section presents and discusses the results of the empirical analysis. Finally, the last section summarizes the findings of the research and also concludes the discussion.Literature on capital structureThe relationship between capital structure and firm value has been the subject of considerable debate. Throughout the literature, debate has centered on whether there is an optimal capital structure for an individual firm or whether the proportion of debt usage is irrelevant to the individual firm’s value. The capital structure of a firm concerns the mix of debt and equity the firm uses in its operation. Brealey and Myers (2003) contend that the choice of capital structure is fundamentally a marketing problem. They state that the firm can issue dozens of distinct securities in countless combinations, but it attempts to find the particular combination that maximizes market value. According to Weston and Brigham (1992), the optimal capital structure is the one that maximizes the market value of the firm’s outstanding shares.Fama and French (1998), analyzing the relationship among taxes, financing decisions, and the firm’s value, concluded that the debt does not concede tax b enefits. Besides, the high leverage degree generates agency problems among shareholders and creditors that predict negative relationships between leverage and profitability. Therefore, negative information relating debt and profitability obscures the tax benefit of the debt. Booth et al. (2001) developed a study attempting to relate the capital structure of several companies in countries with extremely different financial markets. They concluded thatthe variables that affect the choice of the capital structure of the companies are similar, in spite of the great differences presented by the financial markets. Besides, they concluded that profitability has an inverse relationship with debt level and size of the firm. Graham (2000) concluded in his work that big and profitable companies present a low debt rate. Mesquita and Lara (2003) found in their study that the relationship between rates of return and debt indicates a negative relationship for long-term financing. However, they found a positive relationship for short-term financing and equity.Hadlock and James (2002) concluded that companies prefer loan (debt) financing because they anticipate a higher return. Taub (1975) also found significant positive coefficients for four measures of profitability in a regression of these measures against debt ratio. Petersen and Rajan (1994) identified the same association, but for industries. Baker (1973), who worked with a simultaneous equations model, and Nerlove (1968) also found the same type of association for industries. Roden and Lewellen (1995) found a significant positive association between profitability and total debt as a percentage of the total buyout-financing package in their study on leveraged buyouts. Champion (1999) suggested that the use of leverage was one way to improve the performance of an organization.In summary, there is no universal theory of the debt-equity choice. Different views have been put forward regarding the financing choice. The present study investigates the effect of capital structure on profitability of listed firms on the GSE.MethodologyThis study sampled all firms that have been listed on the GSE over a five-year period (1998-2002). Twenty-two firms qualified to be included in the study sample. Variables used for the analysis include profitability and leverage ratios. Profitability is operationalized using a commonly used accounting-based measure: the ratio of earnings before interest and taxes (EBIT) to equity. The leverage ratios used include:. short-term debt to the total capital;. long-term debt to total capital;. total debt to total capital.Firm size and sales growth are also included as control variables.The panel character of the data allows for the use of panel data methodology. Panel data involves the pooling of observations on a cross-section of units over several time periods and provides results that are simply not detectable in pure cross-sections or pure time-series studies. A general model for panel data that allows the researcher to estimate panel data with great flexibility and formulate the differences in the behavior of thecross-section elements is adopted. The relationship between debt and profitability is thus estimated in the following regression models:ROE i,t =β0 +β1SDA i,t +β2SIZE i,t +β3SG i,t + ëi,t (1) ROE i,t=β0 +β1LDA i,t +β2SIZE i,t +β3SG i,t + ëi,t (2) ROE i,t=β0 +β1DA i,t +β2SIZE i,t +β3SG i,t + ëi,t (3)where:. ROE i,t is EBIT divided by equity for firm i in time t;. SDA i,t is short-term debt divided by the total capital for firm i in time t;. LDA i,t is long-term debt divided by the total capital for firm i in time t;. DA i,t is total debt divided by the total capital for firm i in time t;. SIZE i,t is the log of sales for firm i in time t;. SG i,t is sales growth for firm i in time t; and. ëi,t is the error term.Empirical resultsTable I provides a summary of the descriptive statistics of the dependent and independent variables for the sample of firms. This shows the average indicators of variables computed from the financial statements. The return rate measured by return on equity (ROE) reveals an average of 36.94 percent with median 28.4 percent. This picture suggests a good performance during the period under study. The ROE measures the contribution of net income per cedi (local currency) invested by the firms’ stockholders; a measure of the efficiency of the owners’ invested capital. The variable SDA measures the ratio of short-term debt to total capital. The average value of this variable is 0.4876 with median 0.4547. The value 0.4547 indicates that approximately 45 percent of total assets are represented by short-term debts, attesting to the fact that Ghanaian firms largely depend on short-term debt for financing their operations due to the difficulty in accessing long-term credit from financial institutions. Another reason is due to the under-developed nature of the Ghanaian long-term debt market. The ratio of total long-term debt to total assets (LDA) also stands on average at 0.0985. Total debt to total capital ratio(DA) presents a mean of 0.5861. This suggests that about 58 percent of total assets are financed by debt capital. The above position reveals that the companies are financially leveraged with a large percentage of total debt being short-term.Table I.Descriptive statisticsMean SD Minimum Median Maximum━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ROE 0.3694 0.5186 -1.0433 0.2836 3.8300SDA 0.4876 0.2296 0.0934 0.4547 1.1018LDA 0.0985 0.1803 0.0000 0.0186 0.7665DA 0.5861 0.2032 0.2054 0.5571 1.1018SIZE 18.2124 1.6495 14.1875 18.2361 22.0995SG 0.3288 0.3457 20.7500 0.2561 1.3597━━━━━━━━━━━━━━━━━━━━━━━━━━━━━Regression analysis is used to investigate the relationship between capital structure and profitability measured by ROE. Ordinary least squares (OLS) regression results are presented in Table II. The results from the regression models (1), (2), and (3) denote that the independent variables explain the debt ratio determinations of the firms at 68.3, 39.7, and 86.4 percent, respectively. The F-statistics prove the validity of the estimated models. Also, the coefficients are statistically significant in level of confidence of 99 percent.The results in regression (1) reveal a significantly positive relationship between SDA and profitability. This suggests that short-term debt tends to be less expensive, and therefore increasing short-term debt with a relatively low interest rate will lead to an increase in profit levels. The results also show that profitability increases with the control variables (size and sales growth). Regression (2) shows a significantly negative association between LDA and profitability. This implies that an increase in the long-term debt position is associated with a decrease in profitability. This is explained by the fact that long-term debts are relatively more expensive, and therefore employing high proportions of them could lead to low profitability. The results support earlier findings by Miller (1977), Fama and French (1998), Graham (2000) and Booth et al. (2001). Firm size and sales growth are again positively related to profitability.The results from regression (3) indicate a significantly positive association between DA and profitability. The significantly positive regression coefficient for total debt implies that an increase in the debt position is associated with an increase in profitability: thus, the higher the debt, the higher the profitability. Again, this suggests that profitable firms depend more on debt as their main financing option. This supports the findings of Hadlock and James (2002), Petersen and Rajan (1994) and Roden and Lewellen (1995) that profitable firms use more debt. In the Ghanaian case, a high proportion (85 percent)of debt is represented by short-term debt. The results also show positive relationships between the control variables (firm size and sale growth) and profitability.Table II.Regression model results━━━━━━━━━━━━━━━━━━━━━━━━━━━━━Profitability (EBIT/equity)Ordinary least squares━━━━━━━━━━━━━━━━━━━━━━━━━━━━━Variable 1 2 3SIZE 0.0038 (0.0000) 0.0500 (0.0000) 0.0411 (0.0000)SG 0.1314 (0.0000) 0.1316 (0.0000) 0.1413 (0.0000)SDA 0.8025 (0.0000)LDA -0.3722(0.0000)DA -0.7609(0.0000)R²0.6825 0.3968 0.8639SE 0.4365 0.4961 0.4735Prob. (F) 0.0000 0.0000 0.0000━━━━━━━━━━━━━━━━━━━━━━━━━━━━ConclusionsThe capital structure decision is crucial for any business organization. The decision is important because of the need to maximize returns to various organizational constituencies, and also because of the impact such a decision has on an organization’s ability to deal with its competitive environment. This present study evaluated the relationship between capital structure and profitability of listed firms on the GSE during a five-year period (1998-2002). The results revealed significantly positive relation between SDA and ROE, suggesting that profitable firms use more short-term debt to finance their operation. Short-term debt is an important component or source of financing for Ghanaian firms, representing 85 percent of total debt financing. However, the results showed a negative relationship between LDA and ROE. With regard to the relationship between total debt and profitability, the regression results showed a significantly positive association between DA and ROE. This suggests that profitable firms depend more on debt as their main financing option. In the Ghanaian case, a high proportion (85 percent) of the debt is represented in short-term debt.译文加纳上市公司资本结构对盈利能力的实证研究论文简介资本结构决策对于任何商业组织都是至关重要的。
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文献信息：文献标题：Capital Structure Theory: An Overview（资本结构理论综述）国外作者：DK Yapa Abeywardhana文献出处：《Accounting and Finance Research》,2017,6(1):133-138 字数统计：英文2840单词，15223字符；中文5026汉字外文文献：Capital Structure Theory: An Overview Abstract Capital structure is still a puzzle among finance scholars. Purpose of this study is to review various capital structure theories that have been proposed in the finance literature to provide clarification for the firms’ capital structure decision. Starting from the capital structure irrelevance theory of Modigliani and Miller (1958) this review examine the several theories that have been put forward to explain the capital structure.Three major theories emerged over the years following the assumption of the perfect capital market of capital structure irrelevance model. Trade off theory assumes that firms have one optimal debt ratio and firm trade off the benefit and cost of debt and equity financing. Pecking order theory (Myers, 1984, Myers and Majluf, 1984) assumes that firms follow a financing hierarchy whereby minimize the problem of information asymmetry. But neither of these two theories provide a complete description why some firms prefer debt and others prefer equity finance under different circumstances.Another theory of capital structure has introduced recently by, Baker and Wurgler (2002), market timing theory, which explains the current capital structure as the cumulative outcome of past attempts to time the equity market. Market timing issuing behaviour has been well established empirically by others already, but Baker and Wurgler (2002) show that the influence of market timing on capital structure is regular and continuous. So the predictions of these theories sometimes acted in acontradictory manner and Myers (1984) 32 ye ars old question “How do firms choose their capital structure?” still remains.Keywords: Capital structure, Pecking order theory, Trade off theory, Market Timing Theory1.IntroductionThe second financing choice faced by the firm, Capital Structure is still a puzzle in finance. Capital structure or financial leverage decision should be examined concerning how debt and equity mix in the firm’s capital structure influence its market value. Debt to equity mix of the firm can have important implications for the value of the firm and cost of capital. In maximizing shareholders wealth firm use more debt capital in the capital structure as the interest paid is a tax deductible and lowers the debt’s effective cost. Further equity holders do not have to share their profit with debt holders as the debt holders get a fixed return. However, the higher the debt capital, riskier the firm, hence the higher its cost of capital. Therefore it is important to identify the important elements of capital structure, precise measure of these elements and the best capital structure for a particular firm at a particular time.Researchers and practitioners explain conflicting theories on capital structure. Durand (1952) states using the Net Income (NI) approach that firm can decrease its cost capital and consequently increase the value of the firm through debt financing. In contrast, Modigliani and Miller (1958) claims in their seminal paper capital structure irrelevance that firm’s value is independent of its debt to equity ratio whic h is known as Net Operating Income (NOI) approach. They argue that perfect capital market without taxes and transaction cost the firm value remain constant to the changes in the capital structure. According to Pandey (2007) the traditional approach has emerged a compromise to the extreme position taken by the NI approach. Traditional approach does not assume constant cost of equity change in debt to equity ratio and continuously declining Weighted Average Cost of Capital (WACC). Further this approach assume the concept of optimal capital structure and thereby very clearly implies that WACC decreases only for a certain level of financial leverage andreaching the minimum level. Further increase in financial leverage would increase the WACC.During the past five decades various theories have been developed and to explain the capital structure and value of the firm and main factors determining capital structure. Simultaneously enormous number of empirical studies have also tried to explain these theories and their effectiveness.2.Capital Structure Theories2.1.Capital Structure Irrelevance Theory of Modigliani and MillerCapital structure irrelevance theory of Modigliani and Miller (1958) is considered as the starting point of modern theory of capital structure. Based on assumptions related to the behavior of investors and capital market MM illustrates that firm value is unaffected by the capital structure of the firm. Securities are traded in perfect capital market, all relevant information are available for insiders and outsiders to take the decision (no asymmetry of information), that is transaction cost, bankruptcy cost and taxation do not exist. Borrowing and lending is possiblefor firms andindividual investors at the same interest rate which permits for homemade leverage, firms operatingin a similar risk classes and have similar operating leverage, interest payable on debt do not save any taxes and firms follow 100% dividend payout. Under these assumptions MM theory proved that there is no optimal debt to equity ratio and capital structure is irrelevant for the shareholders wealth. This preposition presented by MM (1958) in their seminal paper and argue that value of levered firm is same as the value of unlevered firm. Therefore they propose that managers should not concern the capital structure and they can freely select the composition of debt to equity. Important contributions to the MM approach include Hirshleifer (1966) and Stiglitz (1969). Further in their preposition II they claim that increase in leverage increase the risk of the firm and as a result the cost of equity increases. But WACC of the firm remain constant as cost of debt compensate with higher cost of equity.Capital structure irrelevance theory was theoretically very sound but was based on unrealistic set of assumptions. Therefore this theory led to a plenty of research oncapital structure. Even though their theory was valid theoretically, world without taxes were not valid in reality. In order to make it more accurate Modigliani and Miller (1963) incorporated the effect of tax on cost of capital and firm value. In the presence of corporate taxes, the firm value increase with the leverage due to the tax shield. Interest on debt capital is an acceptable deduction from the firm’s income and thu s decreases the net tax payment of the firm. This would result in an added benefit of using debtcapital through lowering the capital cost of the firm. Drawbacks in MM theory stimulated series of research devoted on proving irrelevance as theoretical and empirical matter.So may other theories that contribute to capital structure theorem have developed based on the MM theorem and it is much hard to validate any of them. Even though there are weaknesses in MM theorem it cannot be completely ignored or excluded.2.2.Trade off TheoryOne of the basic theory that have dominated the capital structure theory which recommends that optimal level of the debt is where the marginal benefit of debt finance is equal to its marginal cost. Firm can achieve an optimal capital structure through adjusting the debt and equity level thereby balancing the tax shield and financial distress cost. There is no consensus among researchers on what consist the benefit and costs. Eliminating the constraints of the capital structure irrelevance proposition of MM Myers (1984) use the trade of theory as a theoretical foundation to explain the “Capital Structure Puzzle”. Myers (1977) suggest that the use of debt up to a certain level offset the cost of financial distress and interest tax shield. According to Fama and French (2002) the optimal capital structure can be identified through the benefits of debt tax deductibility of interest and cost of bankruptcy and agency cost.Arnold (2008) explains how is the increase in debt capital in the capital structure effect the value of the firm in the Figure 1. As debt capital increase WACC of the firm declines until the firm reaches the optimal gearing level and cost of financial distress increases along with the debt level. This is confirmed by Miller (1988) that the optimal debt to equity ratio shows the highest possible tax shield that the company can enjoy. Further consistent with Modigliani and Miller (1963), Miller (1988)confirmed the fact that firms increase the risk of bankruptcy due to the debt capital in their capital structure. In the trade off theory cost of debt are linked with direct as well as indirect cost of bankruptcy. Bradley et. al., (1984) explained that cost of bankruptcy include legal and administrative cost, other indirect cost resulting from loosing of customers and trust between staff and suppliers due to the uncertainties.Figure 1Apart from the bankruptcy cost, agency cost of Jenson and Meckling (1976) is also considered in the trade off model. Jenson and Meckling (1976) explains that separation of ownership and control is the reason to rise the agency cost. According to Arnold (2008) agency costs are direct and indirect costs result from principals and agents act in their best interest and, failure to make agents to act this way.Jenson (1986) states that debt can reduce the agency cost and argue that higher the debt capital grater the commitment to pay out more cash. Though, Frank and Goyal (2008) contend that it is not been totally explained the impact of agency conflicts on capital structure. Harris and Raviv (1990) suggest that debt capital in the capital structure produce valuable information in monitoring the agency behavior andfor self-interest reasons managers are reluctant to liquidate the firm or provide such information which could lead to bankruptcy. Debt holders also concerned only on their benefit and would prefer firms to undertake safe investments nut do not bother about the profitability of those investments. This further explains Fama and French (2002) that due to the cost of debt agency conflicts arise between shareholders and bondholders.Brounen et. al., (2005) states that the presence of optimal capital structure or target capital structure increase the shareholder wealth. Further this study explains that even the value maximizing firm use debt capital to full capacity they face low probability of going bankrupt. Hovakimian et. al. (2004) claims that high profitability of gearing proposes that the firms’ tax shield higher and lower the possibility of bankruptcy. This is consistent with the key prediction of the trade-off model that there is a positive correlation between profitability and gearing. But none ofthese theoretical and empirical studies fully substitute the traditional version and therefore researchers still test the trade-off theory based on the original assumptions. In the literature contradictory evidence can be found in favor and against the trade-off model and optimal capital structure. Titman and Wessels (1988) found that non-debt tax shield and use of debt capital in the capital structure is positively correlated. Contradictory to this results. Consistent with Modigliani and Miller (1963) Mackie-Mason (1990) found that firms which incur a tax loss are rarely issue debt capital. Gearing level of the firms are steady even the tax rates vary to great extent (Wright, 2004). Contrary to this Graham and Harvey (2001) revealed that capital structure choice depend on tax rates.Optimal capital structure choice of the firm would be to issue debt capital and/or equity capital. Trade off theory postulate that all firms have an optimal debt ratio at which the tax shield equal the financial distress cost. This theory eliminate the impact of information asymmetry and incorporating the different information on conflicts between insiders and outsiders Pecking Order Theory proposed.2.3.Pecking Order TheoryAssuming perfect capital market as proposed by MM (1958), Myers and Majluf(1984) propose pecking order theory following the findings of Donaldson (1961) which found that management prefer internally generated funds rather using external funds. Pecking order theory suggest that firm prefer internal financing over debt capital and explains that firms utilize internal funds first then issue debt and finally as the last resort issue equity capital. Al-Tally (2014) confirmed the same that firms prefer to finance new investments with internally generated funds first and then with debt capital and as the last resort they would go for equity issue. Pecking order theory further explains that firms borrow more when internally generated funds are not sufficient to fulfill the investment needs ((Shyam-Sunder and Myers, 1999). This is confirmed by Myers (2001) and found that debt ratio of the firm reflect the cumulative figure for external financing and firms with higher profit and growth opportunities would use less debt capital. If the firm has no investment opportunities profits are retained to avoid the future external financing. Further firms’ debt ratio represent the accumulated external financing as the firm do not have optimal debt ratio.Based on the pecking order theory Harris and Raviv (1991) claim that capital structure decisions are intended to eliminate the inefficiencies caused by information asymmetry. Information asymmetry between insiders and outsiders and separation of ownership explain why firms avoid capital markets (Myers, 2001). Frydenberg (2004) explains that debt issue of a firm give a signal of confidence to the market that firm is an outstanding firm that their management if not afraid of debt financing. Further Frank and Goyal (2007) show that due to the agency conflict between managers and owners and outside investors pecking order can occur.Studies on pecking order theory have not been able to show the significance of this theory on determining firms’ capital structure. Fama and French (1998) compared the trade off theory and pecking order theory and shows that certain features of financial data are better described by the pecking order theory. This is confirmed by Shyam-Sunder and Myers (1999) Raj Aggarwal et al (2006) and Karadeniz et al (2009). Shortcomings in this theory pressed the further development of the theories of capital structure to solve the capital structure puzzle.2.4.Market Timing TheoryMarket timing theory of capital structure explains that firms issue new equity when their share price is overrated and they buy back shares when the price of shares are underrated (Baker and Wurgler, 2002). This fluctuation in the price of shares affect the corporate financing decisions and finally the capital structure of the firm. Further Baker and Wurgler (2002) explains that consistent with the pecking order theory of capital structure market timing theory does not move to target leverage as equity transactions are completely time to stock market conditions. This implies that capital structure changes persuaded by market timing are long lasting (Bessler et al, 2008).This preposition explains that gearing ratios are negatively related to the past stock returns (Bessler 2004) and Welch (2004) found that the most important determinant of capital structure is the stock returns. However Hovakimian (2006) stated that market timing does not have a significant effects on the firms’ capital structure in the long run. Confirming the same Alti (2006) shows that impact of market timing on gearing will entirely fades within two years.2.5.Credit Rating – Capital Structure (CR-CS) HypothesisKisgen (2006) proposed CR-CS hypothesis as an extension of the existing trade off theory of capital structure. Capital structure decision would change based on the cost and benefit associated with the different rating levels. Further Kisgen (2006) explains that credit rating changes directly affects capital structure decision of the firm and when the firms closer to a rating change issues less debt capital than firms not closer a rating change. CR-CS hypothesis complements traditional capital structure theories in deciding the capital structure.3.ConclusionUnderstanding the capital structure decision of firms is the focus of the all the theories discussed above. Modigliani and Miller (1958) theorem of capital structure irrelevance which was developed based on the fundamental nature of debt and equity of the firm and unrealistic assumptions pave the way to the other theories of capitalstructure. The pecking order theory explains how company raises funds following a hierarchy whereas trade off theory advocates tax shield advantage and value maximizing through the optimal debt to equity mix. Ladder of preference use in the pecking order theory and the tax shield advantage of the trade off theory leads to the same conclusion. The tax shield advantage provides rational for the preference for external debt and which signify trade off theory as complementary to the pecking order theory. Differences in capital structure theories occurs in their explanations of significance of taxes and changes in information and agency costs. These theories that have been developed based onModigliani and Miller (1958) would work healthy under some assumptions only but they do not clarify actual gearing level adopted by firms. Further market timing theory do not explain an optimal capital structure and according to this theory capital structure is an outcome of various different decisions the firm has taken over time. This theory suggests that firms issue new shares when they notice they are overrated and that firms repurchase own shares when they consider these to be underrated. It is important to have more comprehensive view on capital structure of firms as these theories are not being able to explain everything. This proposes that there is no single theory on capital structure which incorporates all important factors and predictions of this theories suggest that capital structure puzzle still remains.中文译文：资本结构理论综述摘要资本结构仍然是金融学界的一个难题。