How to Explain the Ways and Speeds of Capital Structure Adjustments: Case Analysis and Discussion Based on FUYAOBOLI

This paper tries to find a theoretical framework to explain typical adjustment ways of corporate capital structure based on extant capital structure theories. First, based on the case study, this paper analyzes the explanation of the main capital structure theories to the capital structure adjustment of the case company. Then, combined with three corporate financial policies, the paper discusses the deep reason of the differences and similarities of these theories in explanation of corporate capital structure, and theoretical integration framework of these theories. This paper argues that trade-off theory and pecking order theory and market timing theory, the three main theories can be understood from the perspective of supply and demand for funds, which unified the three theories to explain all kinds of typical capital structure adjustment. At the same time, this paper points out it is somewhat misleading that using capital structure adjustment speeds estimated by the econometric models infers the time of adjusting capital structure to the target level.