The effect of ownership structure on leverage decision: new evidence from Chinese listed firms

Liu, Qigui, Tian, Gary and Wang, Xiaoming 2011, The effect of ownership structure on leverage decision: new evidence from Chinese listed firms, Journal of the Asia Pacific economy, vol. 16, no. 2, pp. 254-276, doi: 10.1080/13547860.2011.564755.

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Title The effect of ownership structure on leverage decision: new evidence from Chinese listed firms
Author(s) Liu, Qigui
Tian, Gary
Wang, Xiaoming
Journal name Journal of the Asia Pacific economy
Volume number 16
Issue number 2
Start page 254
End page 276
Total pages 23
Publisher Taylor & Francis
Place of publication Oxford, Eng.
Publication date 2011
ISSN 1354-7860
Keyword(s) capital structure
ownership structure
state ownership
largest shareholding
regional institutional development
Summary 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.
Language eng
DOI 10.1080/13547860.2011.564755
Field of Research 150201 Finance
Socio Economic Objective 900101 Finance Services
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2011, Taylor & Francis
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Document type: Journal Article
Collections: Faculty of Business and Law
Department of Finance
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