In this paper, we use financial data of 3462 companies listed on the European market from 2009 to 2018 to examine the impact of the business cycle on the speed of company capital structure adjustment, and further study the difference between the degree of impact on financing constrained and non-financing constrained companies.

First of all, we fit the target capital structure, and calculate the annual capital structure adjustment speed of the whole sample, and find that the capital structure adjustment speed is positively related to the change of the business cycle, namely, the speed of capital structure adjustment is fast during economic prosperity and it will decrease during the economic recession. Secondly, we divide the selected companies into financing-constrained and non- financing constrained companies based on the natural logarithm of total assets and establish two sets of panel data using Eviews 10 to conduct regression respectively. The result shows that compared to financing constrained companies; the relationship between non-financing- constrained companies and the actual business cycle is weak.

This conclusion has played a guiding role for company managers and macroeconomic policymakers to choose a reasonable capital structure and formulate appropriate economic policies according to different macro environments.