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Article: Leverage and investment under a state-owned bank lending environment: Evidence from China

TitleLeverage and investment under a state-owned bank lending environment: Evidence from China
Authors
KeywordsCapital structure
Investment
State ownership of banks and firms
China
Issue Date2008
PublisherElsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/09291199
Citation
Journal of Corporate Finance, 2008, v. 14 n. 5, p. 642-653 How to Cite?
AbstractThis study examines the relations between leverage and investment in China's listed firms, where corporate debt is principally provided by state-owned banks. We obtain three major findings. First, there is a negative relation between leverage and investment. Second, the negative relation between leverage and investment is weaker in firms with low growth opportunities and poor operating performance than in firms with high growth opportunities and good operating performance. Third, the negative relation between leverage and investment is weaker in firms with a higher level of state shareholding than in firms with a lower level of state shareholding. Overall, our results are consistent with the hypothesis that the state-owned banks in China impose fewer restrictions on the capital expenditures of low growth and poorly performing firms and also firms with greater state ownership. This creates an overinvestment bias in these firms.
Persistent Identifierhttp://hdl.handle.net/10722/192327
ISSN
2015 Impact Factor: 1.286
2015 SCImago Journal Rankings: 1.446
SSRN
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorFirth, Men_US
dc.contributor.authorLin, Cen_US
dc.contributor.authorWong, SMLen_US
dc.date.accessioned2013-10-24T01:49:57Z-
dc.date.available2013-10-24T01:49:57Z-
dc.date.issued2008en_US
dc.identifier.citationJournal of Corporate Finance, 2008, v. 14 n. 5, p. 642-653en_US
dc.identifier.issn0929-1199en_US
dc.identifier.urihttp://hdl.handle.net/10722/192327-
dc.description.abstractThis study examines the relations between leverage and investment in China's listed firms, where corporate debt is principally provided by state-owned banks. We obtain three major findings. First, there is a negative relation between leverage and investment. Second, the negative relation between leverage and investment is weaker in firms with low growth opportunities and poor operating performance than in firms with high growth opportunities and good operating performance. Third, the negative relation between leverage and investment is weaker in firms with a higher level of state shareholding than in firms with a lower level of state shareholding. Overall, our results are consistent with the hypothesis that the state-owned banks in China impose fewer restrictions on the capital expenditures of low growth and poorly performing firms and also firms with greater state ownership. This creates an overinvestment bias in these firms.-
dc.languageengen_US
dc.publisherElsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/09291199-
dc.relation.ispartofJournal of Corporate Financeen_US
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsNOTICE: this is the author’s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [VOL 14, ISSUE 5, (2008)] DOI 10.1016/j.jcorpfin.2008.08.002-
dc.subjectCapital structure-
dc.subjectInvestment-
dc.subjectState ownership of banks and firms-
dc.subjectChina-
dc.titleLeverage and investment under a state-owned bank lending environment: Evidence from Chinaen_US
dc.typeArticleen_US
dc.description.naturepreprint-
dc.identifier.doi10.1016/j.jcorpfin.2008.08.002en_US
dc.identifier.scopuseid_2-s2.0-56349088276en_US
dc.identifier.volume14en_US
dc.identifier.issue5en_US
dc.identifier.spage642en_US
dc.identifier.epage653en_US
dc.identifier.isiWOS:000261906100010-
dc.identifier.ssrn1318457-

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