The formation of post-capital structure theory

Modern capital structure theory is centered on modigliani's and Miller's Theorem (MM Theorem), which inherits traditional theories such as Williams, Graham and Dodd, and then develops mainly along two main lines: one left and one right. One is the "left wing" represented by Peleg, Cervin, Brennan and Stapleton, which mainly discusses the influence of tax differences on capital structure. This school finally evolved into Miller's hands and reached its peak, forming the famous Miller equilibrium; The other is the "right wing" with Baxter, Stiglitz, Altman and Warner as the main participants, focusing on the relationship between bankruptcy cost and capital structure, and then extending to the cost of financial distress. These two main lines ultimately come down to the trade-off theory advocated by Robichek, Myers, Scott, Klaus and Licenberg. After being strongly criticized by Miller, the trade-off theory was revived as the post-trade-off theory under the leadership of Di Angelo, Masulis and King. However, in the late 1970s, more precisely, between 1976- 1979, the framework of modern capital structure theory changed greatly, and the new capital structure theory with information asymmetry as the core replaced the modern capital structure theory and entered the academic arena. The new capital structure theory takes information asymmetry as the core, and mainly forms two major ideological trends: namely, connecting with modern information economics to form two major ideological trends: signal transmission theory and principal-agent theory. The new capital structure theory does not simply follow the theoretical routine of modern capital structure. Instead, we always pay attention to the influence of "external factors" such as taxation and bankruptcy on the optimal capital structure of enterprises, and try to analyze the capital structure from the "internal factors" of enterprises through the concepts of "signal", "contract", "motivation" and "incentive" in the theory of information asymmetry. In this way, the new capital structure theory successfully transforms the balance problem of modern capital structure theory into the problem of structure or system design, thus opening up a new research direction for the study of capital structure theory and greatly enriching the content of capital structure theory.

However, after the rapid development in the early 1980s, the new capital structure theory was quite unsustainable in the mid-1980s. The fundamental reason is that the information asymmetry theory, as the core of the new capital structure theory, has declined. As Harris and Raviv later pointed out: "The information asymmetry method has reached the turning point of diminishing returns". In this situation, the new capital structure theory is eager to find a new theoretical core, which can not only consolidate the achievements of various schools of the new capital structure theory, but also break through the shackles of the theoretical framework of information asymmetry, analyze and explain the capital structure problem from a new academic perspective, thus generating new attraction, avoiding the modern fracture of the capital structure theory, and enabling the capital structure theory to come down in one continuous line and continue. Under this academic background, the post-capital structure theory came into being. Post-capital structure theory includes two branches: capital structure management control school and capital structure product market school. Among them, the school of capital structure management control has another background. Since the early 1980s, inter-company acquisitions have intensified, reaching its peak at 1988. It is estimated that the transaction volume of American enterprises' M&A activities was only $44.3 billion in 1980 and soared to $246.9 billion in 1988. Correspondingly, the theory of corporate control market since MANET (1965) has received unprecedented attention from the academic circles, and a large number of influential classical documents have been produced. The theory of corporate control market quickly became the mainstream theory of western finance, so financial literature began to examine the relationship between corporate control market and capital structure. Therefore, the school of capital structure management control based on the market theory of corporate control rights was born.