Empirical analysis and optimization of capital structure adjustment

Abstract

This paper analyzes capital structure's characteristics and presents its simplified mathematical model. Panel data analysis shows that the listed companies prefer equity financing rather than debt financing. Furthermore, we propose a capital structure optimization model with uncertain equity financing constraints. We formulate the capital structure optimization problem as a two-stage stochastic optimization problem and solve it. Finally, numerical examples show that our optimization approach can improve the statistics result of capital structure adjustment.