The effects of China’s split-share reform on firms’ capital structure choice

Guo, Liang; Dai, Ya; Lien, Donald

doi:10.1080/00036846.2015.1125430

Cited by 20 publications

(21 citation statements)

References 34 publications

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“…A special feature of the corporate ownership structure in China is the existence of non-tradable shares including shares owned by the state to retain control over listed firms, which are classified as state shares and legal person shares (Jiang et al , 2010; Huang and Wright, 2015; Xu et al , 2015; Guo et al , 2016). The non-tradable shares give entitlement to exactly the same cash flow and voting rights but are not publicly tradable.…”

Section: Institutional Background and Hypothesis Developmentmentioning

confidence: 99%

“…Corporate governance and principal–agent relationships in Chinese firms are often different from those in developed markets which may lead to managerial entrenchment and tunneling by controlling shareholders (Jiang et al , 2010; Liu and Tian, 2012). In particular, the majority of Chinese listed firms are privatized and partially privatized SOEs that sold their shares in the domestic stock markets as a result of the government’s privatization strategy over recent decades (Jiang et al , 2010; Huang and Wright, 2015; Guo et al , 2016). The state has maintained control in many of the listed firms, and the ownership structure of the listed firms exerts strong influence on the nature of firm leadership and leads to principal–principal conflicts in addition to principal–agent conflicts, with politicians and managers with political background being appointed as directors, supervisors and executives in many listed firms.…”

Section: Introductionmentioning

confidence: 99%

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Ownership structure and tax aggressiveness of Chinese listed companies

Ying

Wright

Huang

2017

IJAIM

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Purpose The purpose of this paper is to investigate the influence of state shareholding and control versus institutional investors on tax aggressiveness of Chinese listed firms. Design/methodology/approach By exploring recently available tax reconciliation data required under 2006 Accounting Standards for Business Enterprises on a sample of Chinese A-share listed firms, the authors calculate a direct measure of tax aggressiveness and investigate the influence of firm ownership structure on their tax aggressiveness. Findings The authors find that state ownership and control are positively associated with corporate tax aggressiveness. A positive link between the collective shareholding by the top ten shareholders and firm tax aggressiveness is also found. In contrast, institutional share ownership is negatively associated with corporate tax aggressiveness. Research limitations/implications The results indicate that political connections and ownership concentration empower firms to pursue aggressive tax planning, whereas institutional investors partially mitigate such influences. Originality/value This paper complements recent studies on tax aggressiveness in the USA by analyzing tax planning activities of Chinese listed firms. The authors highlight firm ownership and control factors that encourage aggressive tax planning in China. This paper has important implications for both public policy and corporate governance in emerging markets similar to China.

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Section: Institutional Background and Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Ownership structure and tax aggressiveness of Chinese listed companies

Ying

Wright

Huang

2017

IJAIM

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“…The results of previous study carried out by explained that Chinese firms take 5.40 years on average to adjust toward total debt ratio that is a little higher as compared to our results (5.21 years). 6 also presents the results of the adjustment rate toward the target capital structure of Chinese listed nonfinancial firms by comparing 9,867 [7] firm-year observations from the prereform period (1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006) with 17,678 firm-year observations from the postreform period (2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015). The results indicate that Chinese firms partially adjust their target capital structure in both periods; however, their adjustment rate is slightly faster during the postreform period, which favors our hypothesis 2.…”

Section: Target Capital Structure and Adjustment Ratementioning

confidence: 99%

Split-share reforms and capital structure adjustment in China: a dynamic panel fractional estimation

Ahsan

Mirza²,

Al‐Gamrh

et al. 2020

JES

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PurposeThe purpose of this study is to explain the adjustment rate toward the target capital structure of Chinese nonfinancial listed firms and to investigate the impacts of the split-share reforms (2005–2006) on the capital structure adjustment rate.Design/methodology/approachThe authors control for the unobserved heterogeneity and the fractional nature of the adjustment rate by applying an unbiased dynamic panel fractional estimator on the unbalanced panel data of 27,545 firm-year observations of Chinese nonfinancial firms listed during 1998–2015.FindingsThe authors find that Chinese firms adjust at an annual rate of 19–27% to reach their capital structure targets. The authors also find a positive impact of the split-share reforms on the adjustment rates of Chinese nonfinancial firms toward their target capital structure. Split-share reforms also helped Chinese firms to increase the use of equity financing in their capital structure.Practical implicationsThe authors argue that the government should strengthen capital markets to enable easy access to more financing options so that Chinese firms can acquire cheaper external financing.Originality/valueTo the best of authors' knowledge, this is the first study that applies an unbiased dynamic panel fractional estimator on an extended data set of 27,545 firm-year observations of Chinese nonfinancial firms listed during 1998–2015.

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“…The process of adopting efficient solutions in the CLSC is time consuming and can lead to several problems that demotivated managers from continuing their efforts to implement smart solutions. Furthermore, the CLSC enhances the level of complexities by the remanufacturing process [16][17][18]. The modern circular economy, day by day, replacing the "take, make, consume, and throw away" concept with CLSC by combining numerous processes, including maintenance, repair, refurbishing, remanufacturing, reusing and recycling, which is a worldwide hot research topic for both industry and academia [19][20][21][22].…”

Section: Introductionmentioning

confidence: 99%

A Two-Stage Closed-Loop Supply Chain Pricing Decision: Cross-Channel Recycling and Channel Preference

Pan

Lin

2021

Axioms

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This paper focuses on the pricing problem of a two-stage closed-loop supply chain (CLSC) considering the cross-channel recycling and channel preference based on a single manufacturer and a single traditional retailer. The pricing decision problem raises from the manufacturer’s direct sales and the retailer’s retailing including recycling. Managers need to focus on intelligible management considering consumer channel preferences, cross-channel recovery and pricing strategies. According to game theory, centralized and decentralized CLSC decision models are used to provide an efficient solution to managers for the pricing problem. The centralized model consists of differential and uniform pricing strategy and the decentralized model consists of manufacturer-led Stackelberg, retailer-led Stackelberg and Nash equilibrium game, respectively. The impact of cross-channel recycling rate and channel preference on pricing and profitability in a two-stage CLSC system is explained elaborately in this study. The results show that cross-channel recovery rates and consumer channel preferences have a direct significant impact on pricing strategies including profit allocation decisions in CLSC. It demonstrated that different channel preferences leading to different pricing strategies and decision for manufacturers and retailers choices. Manufacturer’s pricing decreases when channel preferences are constant and cross-channel recovery rates increase. Retailer’s pricing remains stable as the cross-channel recovery rate has less affected on it. Furthermore, if the cross-channel recovery rates increase, then the manufacturers pricing decreases and retailers pricing increases. This information will be a helpful guideline for the manager to select suitable pricing strategies based on the company scenario.

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The effects of China’s split-share reform on firms’ capital structure choice

Cited by 20 publications

References 34 publications

Ownership structure and tax aggressiveness of Chinese listed companies

Ownership structure and tax aggressiveness of Chinese listed companies

Split-share reforms and capital structure adjustment in China: a dynamic panel fractional estimation

A Two-Stage Closed-Loop Supply Chain Pricing Decision: Cross-Channel Recycling and Channel Preference

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