1、本科毕业论文（设计） 外 文 翻 译 原文： Capital structure, dividend policy, and multinational: Theory versus empirical evidence 3.1.Factors influencing capital structure and dividend policy It is important to examine the factors that impact capital structure and dividend policy so that appropriate control variables
2、can be included in the examination of the impact of multinational on capital structure and dividend policy. The list of these control variables must be based on extant theories and empirical evidence related to capital structure and dividend policy. Theories in these areas generally start with the w
3、ell known results presented in Modigliani and Miller (1958) note that in an efficient markets world with no taxes or bankruptcy costs, the value of a firm is invariant to its capital structure. This theory has since been modified and extended so that capital structure does matter to include not only
4、 the impact of taxes and bankruptcy costs, but also the real world costs related to agency problems, asymmetric information, moral hazard, and other frictions and deviations from perfect markets. 3.1.1. Operating leverage and other influences The operating leverage of a firm reflects its business ri
5、sk. Firms with higher operating leverage face higher bankruptcy probabilities and should have lower financial leverage. However, higher operating leverage is generally associated with higher levels of fixed tangible assets indeed the proportion of such assets is widely used in the literature as a me
6、asure of operating leverage. A firms level of fixed assets should be associated positively with leverage as high levels of such assets can be used as collateral for loans (Friend & Lang, 1988； Long & Malitz, 1985). Jensen, Solberg, and Zorn (1992) provide empirical support for the positive impact on
7、 leverage of assets available for collateral. The non-debt tax shield variable is also important as firms with high levels of non-debt tax shields are expected to have lower debt levels (Kim & Sorensen, 1986). Due to institutional practices, herding among managers, bankers, and financiers, and their
8、 influence of firm risk, capital structure and dividend policy can also be expected to vary with firm size and industry classification. 3.1.2. Trade-off theories In the trade-off theory, capital structure decisions of firms depend on benefits and costs of using more debt. Less debt is used if the co
9、st of bankruptcy is higher than the tax shield or other benefits of using debt (Kim & Sorensen, 1986； Graham, 2000). Therefore, the trade-off theory suggests a negative relationship between leverage and bankruptcy costs and a positive relationship between leverage and firms marginal tax rate(Lasfer,
10、 1995； Cloyd, Limberg, & Robinson, 1997). According to Rozeff (1982), riskier firms pay out lower dividends indicating a negative relationship between dividends, bankruptcy costs, and the amount of debt used by a firm. 3.1.3. Impact of agency costs Availability of free cash flow creates an agency pr
11、oblem since managers can use some of the free cash available for their own benefit, thereby decreasing the value of the firm (Jensen & Meckling, 1976). To protect against this managerial sub-optimal behavior, firms with higher level of cash flow should use higher leverage. The asymmetric information
12、 model of Ross (1977) also notes that there should be a positive relationship between use debt and the firms profitability. Agency theory also indicates that firms with higher growth opportunities will hold less debt controlling for profitability and Stulz (1990)notes that due to the under-investmen
13、t problem, firms with high growth opportunities should hold less debt. Chang (1992) contends that firms with high profitability use more debt in its capital structure controlling for investment opportunities. The agency issue in dividend payout decisions is similar to capital structure decisions in
14、the presence of agency costs. In agency model of Jensen and Meckling (1976) and Jensen (1986), dividends and debt help control the agency costs of overinvestment if there are conflicts of interests between managers and stockholders. Thus, agency costs predict a positive relation between firms free c
15、ash flow and payment of dividends. According to the signaling hypothesis of Ross (1977),firms with high profitability will also pay out more dividends as costly credible signals. However, firms with higher growth opportunities will pay out less dividends especially when there is an available alterna
16、tive (debt) as a monitoring technique (Easterbrook, 1984). 3.1.4. Pecking order theory The pecking order model (Myers & Majluf, 1984) contends that because of transaction costs and information asymmetry, firms finance new investments first with retained earnings, then successively with safe debt, ri
17、sky debt and finally with equity. According to this pecking order model, more profitable firms should have lower leverage and lower short-term, but not long-term, payout controlling for investment opportunities. In a simple version of the pecking order model, firms with high investment and growth op
18、portunities are predicted to have high leverage (on the condition that investment is more than the internal capital). In a more complex version of pecking order model, firms with high investment and growth opportunity will carry low leverage taking into consideration current as well as future financ
19、ing costs. In contrast with the agency theory of free cash flow, Myers and Majluf (1984) predict that leverage decreases with the higher level of free cash flow. Pecking order theory also predicts that firms with high future growth opportunities should pay out lower dividends. Shyam-Sunder and Myers
20、 (1999) introduce a funding deficit model to test the pecking order hypothesis of firms capital structure. They argue that, except for firms at or near their debt capacity, pecking order predicts that the deficits will be filled entirely with new debt issues. Therefore, we can expect a positive rela
21、tionship between funding deficit and leverage assuming that the firms are still below their debt capacity. 3.2.Interdependence between capital structure and dividend policy Many of the factors discussed above have been shown to influence not only capital structure but also dividend policy. Easterbrook (1984)documents that dividends exists because they induce firms to float new securities suggesting that firms dividend decisions linked to firms financing decisions. Intuitively, it is clear that the firms payout ratio determines its retention ratio and, thus, its capital structure.
