TY - JOUR
T1 - The effect of ownership structure on leverage decision
T2 - New evidence from Chinese listed firms
AU - Liu, Qigui
AU - Tian, Gary
AU - Wang, Xiaoming
PY - 2011/5
Y1 - 2011/5
N2 - This paper examines the effect of state control and ownership structure on the leverage decision of firms listed in the Chinese stock market. Our results show that state-owned enterprises (SOEs) have higher leverage ratios than non-SOEs, and SOEs in regions with a poorer institutional environment have higher leverage ratios than SOEs in better regions. We also show that the largest shareholding (the percentage of shares held by the largest shareholder) in the SOEs has a negative relationship with the leverage ratio, while the largest shareholding in non-SOEs has a non-linear relationship with the short-term and long-term debt ratios. Finally, this study also shows that the share split reform and the improvement of institutional environment both weaken the negative relationship and strengthen the positive relationship between largest shareholding and leverage of SOEs and non-SOEs to some extent. This paper documents how the financing behaviour of SOEs is more influenced by government intervention, while the financing behaviour of non-SOEs is more market oriented.
AB - This paper examines the effect of state control and ownership structure on the leverage decision of firms listed in the Chinese stock market. Our results show that state-owned enterprises (SOEs) have higher leverage ratios than non-SOEs, and SOEs in regions with a poorer institutional environment have higher leverage ratios than SOEs in better regions. We also show that the largest shareholding (the percentage of shares held by the largest shareholder) in the SOEs has a negative relationship with the leverage ratio, while the largest shareholding in non-SOEs has a non-linear relationship with the short-term and long-term debt ratios. Finally, this study also shows that the share split reform and the improvement of institutional environment both weaken the negative relationship and strengthen the positive relationship between largest shareholding and leverage of SOEs and non-SOEs to some extent. This paper documents how the financing behaviour of SOEs is more influenced by government intervention, while the financing behaviour of non-SOEs is more market oriented.
UR - http://www.scopus.com/inward/record.url?scp=79957855659&partnerID=8YFLogxK
U2 - 10.1080/13547860.2011.564755
DO - 10.1080/13547860.2011.564755
M3 - Article
AN - SCOPUS:79957855659
SN - 1354-7860
VL - 16
SP - 254
EP - 276
JO - Journal of the Asia Pacific Economy
JF - Journal of the Asia Pacific Economy
IS - 2
ER -