The effect of ownership structure on leverage decision

New evidence from Chinese listed firms

Qigui Liu, Gary Tian*, Xiaoming Wang

*Corresponding author for this work

Research output: Contribution to journalArticle

27 Citations (Scopus)


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.

Original languageEnglish
Pages (from-to)254-276
Number of pages23
JournalJournal of the Asia Pacific Economy
Issue number2
Publication statusPublished - May 2011
Externally publishedYes

Fingerprint Dive into the research topics of 'The effect of ownership structure on leverage decision: New evidence from Chinese listed firms'. Together they form a unique fingerprint.

  • Cite this