An Empirical Investigation Into the Capital-Structure Determinants of Publicly Listed Chinese Companies

Qian, Yanmin; Tian, Yao; Wirjanto, Tony S.

doi:10.2139/ssrn.964259

Cited by 14 publications

(28 citation statements)

References 18 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In accordance with the Pecking Order Theory, since companies with higher levels of fixed assets would have lower levels of information asymmetry, they are much likely to provide more equity. For the purposes of terms, on the other hand, the share of fixed assets is negatively related with short-term debt and positively related with long-term debt according to the Pecking Order Theory (Feikadis and Rovolis, 2007;Qian et al, 2007).…”

Section: Econometric Methodologymentioning

confidence: 99%

“…If investments and dividend disbursements are fixed, profitable companies tend to take on less debt. (Myers, 1984;Myers and Majluf, 1984;Krasker, 1986;Narayanan, 1988;Um, 2001;Bontempi, 2002;Benito, 2003;Frank and Goyal, 2003;Frank and Goyal, 2005;Qian et al, 2007). In the study, the ratio of net profit to equity is considered as profitability variable.…”

Section: Econometric Methodologymentioning

confidence: 99%

See 1 more Smart Citation

Determinants of Capital Structure: The Evidence from European Energy Companies

Berkman¹,

İskenderoğlu²,

Karadeniz³

et al. 2016

IJBA

View full text Add to dashboard Cite

The main aims of this study are to determine the factors which affect capital structure of corporations operating in energy sector and to detect capital structure theories with which capital structure of energy sector companies would comply. In this context, a panel data analysis was performed on totally 79 European energy companies operated between the years 2009 -2012. According to results of the study; diminishing leverage rate caused by increased liquidity in European energy companies can be explained with the Pecking Order Theory, while escalating leverage rate caused by increased tangible fixed assets or equity turnover would be defined with the Trade-off Theory.

show abstract

Section: Econometric Methodologymentioning

confidence: 99%

Section: Econometric Methodologymentioning

confidence: 99%

Determinants of Capital Structure: The Evidence from European Energy Companies

Berkman¹,

İskenderoğlu²,

Karadeniz³

et al. 2016

IJBA

View full text Add to dashboard Cite

show abstract

“…However, results different from others is that debt in Chinese firms have a negative relationship with earnings volatility. Qian et al (2007) have examined the six determinants of capital structure for Chinese listed companies over the period of 1999-2004. The static panel-data models showed that firm size, tangibility and state ownership are positively related with firm's leverage ratio.…”

Section: Capital Structure Research In Chinamentioning

confidence: 99%

“…Since leverage increases the risk of financial distress, it is expected that earnings volatility is negatively related with leverage. As Qian et al (2007) demonstrated, when firms have high volatility, cash will be accumulated during the flourishing period to avoid future underinvestment and thus the negative relationship is advocated from the pecking order hypothesis. Although Hsia (1981) found a positive relationship, Wald (1991) and Booth et al (2001) showed that business risk is negatively correlated with debt.…”

Section: Earnings Volatilitymentioning

confidence: 99%

Determinants of Capital Structure Empirical Evidence from Financial Services Listed Firms in China

Lim¹

2012

IJEF

View full text Add to dashboard Cite

This paper investigates the determinants of capital structure of financial service firms in China. Using a relative regression of accounting data for 36 A-share financial listed companies over the years [2005][2006][2007][2008][2009], an empirical study on determinants of capital structure in financial industry is conducted. The results show that profitability, firm size, non-debt tax shields, earnings volatility and non-circulating shares are significant influence factors in financial sector. Moreover, firm size is positively related to the corporate leverage ratio. It is also found that Chinese institutional characteristic affects the capital choice decision. While it confirmed that capital structure determinant of financial firms are similar to other industry, the largely state ownerships do affect capital structure choices.

show abstract

“…Chinese markets assume that the observed leverage ratio is optimal and examine the determinants of optimal capital structure using static models (e.g., [5] [6], and [7]). [4] argued that the presence of adjustment costs may prevent firms from quickly moving back to their optimal leverage levels, causing actual (observed) leverage ratios to differ from the optimal levels.…”

Section: Guo Et Almentioning

confidence: 99%

A Re-Examination of the Capital Structure Theory: Evidence from Chinese Listed Companies

Guo¹,

Liu²,

Dai³

et al. 2018

TEL

View full text Add to dashboard Cite

In this study, we examine whether and to what extent the main stream capital structure theories developed in Western countries apply to Chinese listed companies during its most recent transition period after year 2000. Specifically, we examine a variety of trade-off and pecking order models and compare their performance by nesting these two different models in the same regression. Using market-based leverage data from 1057 non-financial Chinese listed firms during the period from 2000 to 2011, we present empirical evidence indicating that: firstly, equity tracks the financing deficit better than debt in Chinese firms, which is not consistent with the pecking order theory. Secondly, Chinese firms seem to be more sensitive in expanding debt for meeting their financing needs than in using surplus for retiring debt. Thirdly, Chinese firms have an optimal market-based leverage ratio. Both the partial adjustment and error correction models suggest that Chinese firms adjust towards target leverage slowly before 2006. However, after 2006, they accelerate their leverage adjustments at a speed as fast as that documented in the developed markets. The increasing adjustment speeds are attributed to the shrinking transaction costs and agency costs caused by recent currency and share-split structure reforms. Overall the trade-off theory works better than the pecking order theory in explaining Chinese firms' capital structure. Chinese companies' financing behaviors are becoming more akin to those in the developed market with increasing integration and financial liberalization.

show abstract

An Empirical Investigation Into the Capital-Structure Determinants of Publicly Listed Chinese Companies

Cited by 14 publications

References 18 publications

Determinants of Capital Structure: The Evidence from European Energy Companies

Determinants of Capital Structure: The Evidence from European Energy Companies

Determinants of Capital Structure Empirical Evidence from Financial Services Listed Firms in China

A Re-Examination of the Capital Structure Theory: Evidence from Chinese Listed Companies

Contact Info

Product

Resources

About