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Article: The financing behaviour of listed Chinese firms

TitleThe financing behaviour of listed Chinese firms
Authors
KeywordsAgency Theory
Capital Structure
China
Financing Behaviour
Pecking Order Hypothesis
Static Trade-Off Model
Issue Date2006
PublisherAcademic Press. The Journal's web site is located at http://www.elsevier.com/locate/bar
Citation
British Accounting Review, 2006, v. 38 n. 3, p. 239-258 How to Cite?
AbstractThis paper examines the corporate financing behaviour of listed companies in the People's Republic of China. Our results suggest that some determinants of firm leverage (e.g., size, asset tangibility, growth opportunities and profitability) commonly cited in studies on developed economies also appear to be important in China. In particular, the positive relationships that firm size and asset tangibility have with firm leverage are consistent with the predictions of the static trade-off capital structure model. However, these commonly quoted determinants function in a way different from that reported in developing countries. Moreover, we do not find that State ownership, legal person ownership and foreign ownership have important influences on the capital structure choices of Chinese firms. Given the tight regulatory control over equity issues and acute owner-manager incentive conflicts in State-owned firms, we also hypothesise, and find evidence to support, that Chinese firms have built-in incentives for raising equity. This provides one explanation of the negative effect of profitability on firm leverage and shows that some of the unique Chinese institutional features do help shape corporate financing behaviour. © 2006 Elsevier Ltd. All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/188451
ISSN
2015 Impact Factor: 1.34
2015 SCImago Journal Rankings: 0.711
References

 

DC FieldValueLanguage
dc.contributor.authorZou, Hen_US
dc.contributor.authorXiao, JZen_US
dc.date.accessioned2013-09-03T04:07:37Z-
dc.date.available2013-09-03T04:07:37Z-
dc.date.issued2006en_US
dc.identifier.citationBritish Accounting Review, 2006, v. 38 n. 3, p. 239-258en_US
dc.identifier.issn0890-8389en_US
dc.identifier.urihttp://hdl.handle.net/10722/188451-
dc.description.abstractThis paper examines the corporate financing behaviour of listed companies in the People's Republic of China. Our results suggest that some determinants of firm leverage (e.g., size, asset tangibility, growth opportunities and profitability) commonly cited in studies on developed economies also appear to be important in China. In particular, the positive relationships that firm size and asset tangibility have with firm leverage are consistent with the predictions of the static trade-off capital structure model. However, these commonly quoted determinants function in a way different from that reported in developing countries. Moreover, we do not find that State ownership, legal person ownership and foreign ownership have important influences on the capital structure choices of Chinese firms. Given the tight regulatory control over equity issues and acute owner-manager incentive conflicts in State-owned firms, we also hypothesise, and find evidence to support, that Chinese firms have built-in incentives for raising equity. This provides one explanation of the negative effect of profitability on firm leverage and shows that some of the unique Chinese institutional features do help shape corporate financing behaviour. © 2006 Elsevier Ltd. All rights reserved.en_US
dc.languageengen_US
dc.publisherAcademic Press. The Journal's web site is located at http://www.elsevier.com/locate/baren_US
dc.relation.ispartofBritish Accounting Reviewen_US
dc.subjectAgency Theoryen_US
dc.subjectCapital Structureen_US
dc.subjectChinaen_US
dc.subjectFinancing Behaviouren_US
dc.subjectPecking Order Hypothesisen_US
dc.subjectStatic Trade-Off Modelen_US
dc.titleThe financing behaviour of listed Chinese firmsen_US
dc.typeArticleen_US
dc.identifier.emailZou, H: hongzou@hku.hken_US
dc.identifier.authorityZou, H=rp01800en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1016/j.bar.2006.04.008en_US
dc.identifier.scopuseid_2-s2.0-33747334655en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-33747334655&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume38en_US
dc.identifier.issue3en_US
dc.identifier.spage239en_US
dc.identifier.epage258en_US
dc.publisher.placeUnited Kingdomen_US
dc.identifier.scopusauthoridZou, H=12769328900en_US
dc.identifier.scopusauthoridXiao, JZ=7402564707en_US

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