Abstract: According to the classical theory of capital structure, when debt interest is credited into the enterprise costs, the debt will play a role of reducing enterprise tax costs because of the deduction before taxation on the interest, making the debt costs lower than the equity costs and increasing the market value of the stockholders’ equity. Therefore, the tax mechanism can to a certain extent impact the capital structure of enterprises. Taking the implementation of the Law of Corporation Income Tax 2008 as the observing platform of the natural experiment, this paper uses the enterprise-level micro-data to analyze whether the classical capital structure theory can be applied into China’s economical system environment. The results show that the institutional reform of the enterprise income tax can regulate the capital structure of enterprises, which means that the classical capital structure theory can be applied into China’s economical system environment. Further analysis with consideration of the factors of property right indicates that the income tax reform has a greater regulating effect on the capital structure of private enterprise than on that of state-owned enterprises, while the regulating effect on the state-owned enterprises with more barriers and higher monopoly is not significant.

Key words: factors of property tight; tax rate adjustment; capital structure; enterprise income tax