What Are the Different Capital Structure Models?

Post-capital structure theory is one of the representative schools of post-capital structure theory. The capital structure management control school has risen against the background of the decline of new capital structure theory and the development of corporate control market. It focuses on the connection between the capital structure and the market for corporate control, and highlights the important role of managers in capital structure decisions. It mainly includes three important theoretical models such as Stulz model, Harris-Raviv model and Israel model.

Post capital structure theory

modern

The Stulz model, Harris-Raviv model, and Israel model include a wealth of empirical test hypotheses. For example, the four conclusions of Stulz, the two theorems of Harris and Raviv, and Israel's theorem 2 to theorem 7. Unfortunately, both Or Harris and Raviv, or Israel, have not done empirical tests in this regard.

From the above analysis, it can be seen that the capital structure management and control school represented by the Stulz model, Harris-Raviv model, and Israel model has the following two characteristics. These two characteristics also actually reflect the "post" one in the post-capital structure theory. The meaning of the word. First, the "post" represents a "non-modern" thinking that transcends the "new" theory, which reflects the negation of the previous theory; the post-capital structure theory is both a critique of the modern capital structure theory and a new A skepticism of capital structure theory. Post-capital structure theory gets rid of the traditional analysis framework of modern capital structure theory, and ignores other traditional factors (such as tax difference, bankruptcy cost, etc.) that affect corporate capital structure. For example, Stulz simply believes that those factors only change the extent of the problem, not the conclusion of the problem. At the same time, the most important thing is that the core content of information asymmetry in the new capital structure theory has been omitted from the post-capital structure theory, and replaced by other theoretical explanations with more trendy views and broader content. For example, the school of capital structure management control has replaced it with the theory of corporate control market. Stulz, one of the representatives of the capital structure management control school, declared publicly: "Last point, we ignore the asymmetry of information." Why ignore such a theory that plays an important role in the new capital structure theory? Stulz's answer is very interesting, saying: "Although it is a challenging task to build a model that reflects the distribution of voting rights, incentive effects, and information asymmetry, it is far beyond the scope of this article." To understand, Stulz believes that his model is sufficient, and there is no need to borrow the information asymmetry theory at all; the Harris-Raviv model is also no longer centered on information asymmetry. They mentioned in the model: "We assume that the information is symmetric." In one sentence, the role of the information asymmetry theory is easily erased.

Secondly, the prefix "post" also indicates that the post-capital structure theory inherits and inherits the origin relationship of the previous types of capital structure theory, which is a consistent extension of ideas in the same field of financial research. It is pursuing the use of new Theories and new concepts to solve financial problems that cannot be solved by modern capital structure theory and new capital structure theory should not be seen as a complete break with existing theories. Therefore, although we accept the post-capital structure theory's critique of modern capital structure theory and new capital structure theory from some viewpoints, this kind of criticism is not to abandon modern capital structure theory and new capital structure theory completely. In general, both the post-capital structure theory and the new capital structure theory can be regarded as new theories that follow and connect with modern capital structure theory. Whether it is the capital structure management control school or the capital structure product market school, the post-capital structure theory obviously does not completely exclude other schools of the new capital structure theory from their models, and even returns to the modern capital structure theory in some aspects. On the frame. For example, a large number of empirical studies on signal effects in capital structure, such as Dann and DeAngelo, Ingersoll, Brennan and Schwartz, Vermaelen, Mikkelson, Partch, and Jarrell and Poulsen, are widely used to prove the main arguments of the school of capital structure management control. At this point, the post-capital structure theory inherits the wisdom of the new capital structure theory. And Stulz wrote a lot of text in the article after discussing the relationship between the capital structure and the voting right ratio held by the manager, and frankly said: "The manager tries to weigh the marginal cost and benefit of the liability when selecting the company's debt-equity ratio "It can be seen here that Stulz is back to the analysis routine of modern capital structure theory.

At the same time, we should also see that post-capital structure theory is inherently limited. First, post-capital structure theory only challenges modern capital structure theory and new capital structure theory, but there is no way to overthrow the new capital structure theory, nor is it able to rebuild a new theoretical framework for the capital structure theory. Unlike the multi-faceted replacement of the modern capital structure theory by the new capital structure theory, the post-capital structure theory at best only changes the perspective of the new capital structure theory. Secondly, although the post-capital structure theory has successfully challenged the new capital structure theory on the theoretical model, the theoretical challenge that this theoretical challenge can receive is very limited. The empirical tests of McConnell, Servaes, Garvey and Hanka, and Berge alone cannot prove to be one of the representative schools of capital structure management and control. Compared with a wealth of empirical evidence in modern capital structure theory and new capital structure theory, the empirical test of post-capital structure theory is obviously too thin. Of course, as the post-capital structure theory, including the school of capital structure management control, is gradually recognized and accepted, relevant empirical tests will develop. This is what we have to wait and see.