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

Abstract

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.

Determinants of Corporate Capital Structure among Private Manufacturing Firms in Kenya: A Survey of Food and Beverage Manufacturing Firms

“…Thus, the results indicate that the tradeoff theory could not be applied to the private firms under the study. This is in congruence with Lim (2012) claim that trade-off theory has limited explanatory power for Chinese listed companies.…”

“…Despite the prominence of both the trade-off model and the pecking-order model in explaining the selection of capital structure in western countries, Fan et al, (2010) maintain that they do not provide convincing explanations for the capital choices of firms in developing countries because of distinctive institutional environment. In the same vein, Lim (2012) claim that trade-off theory has limited explanatory power for Chinese listed companies and Chinese publicly listed firms seem to follow a different pecking order from developed countries. Indeed, Chen (2004) proposes a new pecking order; retained earnings, then equity and lastly debt.…”

The determinants of capital structure: the evidence from the European Union

“…This proposition agrees with trade off theory. The positive relation between company's size and capital structure has been supported by the evidence of SMEs (Michaelas et al, 1999; Bhiard mac an and Lucey, 2010) and large companies (Ozkan, 2001) and in general (Korajczyk and Levy, 2003;Bauer, 2004;Hanousek and Shamshur, 2011;Nguyen and Wu, 2011;Lim, 2012). However, larger companies have more opportunities to achieve greater sales and consequently retain earnings.…”

“…The most used measure for tangibility is the ratio Fixed assets to Total assets (Bastos et al, 2009;Dincergok and Yalciner, 2011;Nguyen and Wu, 2011;Kouki and Said, 2012;Lim, 2012). We use the same proxy for our research and expect positive infl uence on the capital structure.…”

Determinan Struktur Modal Dan Nilai Perusahaan Pertambangan Pasca Uu Nomor 4 Tahun 2009

“…Hasil penelitian ini mendukung penelitian Bradley et al (1984), Kester (1986), Wald (1990), Pandey (2001), Booth et al (2001), Chen (2004), dan Lim (2012) yang menyimpulkan risiko bisnis menurunkan penggunaan utang suatu perusahaan. Namun penelitian ini tidak sesuai dengan hasil penelitian Homaifar et al (1994), Krishnan dan Moyers (1997), Michaelas et al (1999), dan Deesomsak et al (2004) yang menyatakan risiko bisnis tidak mempengaruhi keputusan struktur modal.…”