Author(s)

Zhiwei Zhang¹, Zhen Wang²

¹Department of Finance, School of Economics, Jinan University, Guangzhou, China.
²Department of System Engineering and Engineering Management, School of Engineering, The Chinese University of Hong Kong, Hong Kong SAR, China.

By using the panel data of quoted company during 2005-2014 and the PVAR model, this paper aims to empirically examine the dynamic and interacting relationships among Debt, Growth of company, PB of company’s stock, the Effective income tax rate. The pvar model can estimate the dynamic relationship of all endogenous variables, and the empirical results show that the Growth, PB and ETR are the critical factors of Debt; The PB’s ability to explain changes in the capital structure has grown stronger over time, and “invalid periods” may occur in the short term. Enterprise Growth and Effective income tax rates both have positive effects in the short term. At the early stage, the enterprises show the debt financing preferences. With the expansion of the scale, the enterprises slowly show the equity financing preferences.

Panel VAR Model, Capital Structure, Impulse Response Analysis

Zhang, Z. and Wang, Z. (2019) The Determinants of Enterprise Capital Structure and Its Dynamic Influence—Based on Panel VAR Model. Journal of Service Science and Management, 12, 899-908. doi: 10.4236/jssm.2019.127061.