The modern capital structure theory attempts to determine an optimal capital structure on the maximum shareholder¡¦s wealth. In practice, it is very difficult to find an optimal capital structure. Nevertheless, the dynamic capital structure model can simulate an optimal capital structure by Monte Carlo approach. Therefore, this study begin at the opinion of sales revenue and modifies the model of Goldstein, Ju and Leland(1998).
Firstly, using the model to simulate the optimality of capital structures about traditional and high-tech industries of Taiwan. Secondly, the impacts of industry characteristic¡Bfirm size¡Bgrowth¡Bprofitability¡Boperating risk and dividend policy on the optimal capital structure are also analyzed. Meanwhile, to investigate the effect of implementation of the integration of individual and corporate taxes on the firm value¡Bdividend policy and capital structure. There are some conclusions in this study.
The simulate results indicate that the leverage ratio of traditional industry is higher than that of high-tech industry. Firm size and growth are positively associated with debt ratio. The profitability and dividend yield are negatively associated with debt ratio. But operating risk and debt ratio have curve relation. The traditional industry trends to optimal static capital structure strategy. But high-tech industry is toward optimal upward dynamic capital structure strategy.
The higher corporate tax rate, the higher firm value is. The shareholder¡¦s individual tax rate and the tax rate on the retained earnings with firm value are negatively relation. So the extent of how tax reform affects firm value depends on the shareholder¡¦s individual tax rate.
According to the model, debt ratio should decrease. The empirical result for the high technology industry has satisfied the theoretical prediction. However, the increase of the debt ratios of firms in the traditional industry indicates that industry framework is changed for higher equity cost. Therefore, the resource of firm funds will be by debt policy. Dividend payment will increase after the implementation of the integration of individual and corporate taxes. The more dividend pay out, the lower firm value is. So it consists with tax-effect hypothesis.
Finally, this study derives the valuation model of dynamic capital structure. The simulate results are consistent with research hypothesis. That can advise managers to revise capital structure and to make dividend policy.
Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0820101-103629 |
Date | 20 August 2001 |
Creators | Huang, Jui-Ching |
Contributors | Feng-Yu Ni, David Shyu, Shyan-Rong Chou, Hung-Chin Li, Szu-Lang Liao |
Publisher | NSYSU |
Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
Language | Cholon |
Detected Language | English |
Type | text |
Format | application/pdf |
Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0820101-103629 |
Rights | withheld, Copyright information available at source archive |
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