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An explanation of capital structure of China's listed property firms

Liang, Jian, Fang Li, Liu and Song, Han-Suck 2014, An explanation of capital structure of China's listed property firms, Property management, vol. 32, no. 1, pp. 4-15, doi: 10.1108/PM-02-2013-0012.

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Title An explanation of capital structure of China's listed property firms
Author(s) Liang, Jian
Fang Li, Liu
Song, Han-Suck
Journal name Property management
Volume number 32
Issue number 1
Start page 4
End page 15
Total pages 12
Publisher Emerald Group Publishing
Place of publication Bingley, Eng.
Publication date 2014-02-11
ISSN 0263-7472
Keyword(s) China, Capital structure, Dynamic panel data models, Listed property company
Summary Purpose– The purpose of this paper is to investigate the determinants of the capital structure of listed property firms in China.Design/methodology/approach– The study is based on quantitative methods such as dynamic panel data models and a panel data set containing financial and accounting data for all listed property companies from 2006 to 2010 in China.Findings– The findings confirm that the state-own shares, the fixed asset values, the total size of assets and profitability have a positive and significant impact on the leverage ratio of listed property firms in China. The negative impact of the tax shields and the currency ratio, and significant impact of state-own shares on capital structure cannot be explained by existing capital structure theory but the unique property market regulation environment and market conditions in China.Research limitations/implications– The findings confirm the applicability of trade-off theory (except for the correlation between leverage and the tax shield) on property companies in China. They also highlight the importance of government policies and special market conditions in explaining the financing behaviour of property companies in transaction countries like China.Practical implications– Complimentary policies should be established along with property market restriction policies to offset their unequal negative effect on property companies with less state-owned shares. Furthermore, government should invest efforts to eliminate the discrimination credit treatment of banks against property companies with non-existent or few state-owned shares.Originality/value– The special financial behaviour of China's property firms and the unique financial and property market conditions highlight the necessity of researching the capital structure of listed property firms in China. However, most of the existing literature focuses on the company financial behaviour in developed countries, and very few studies have been done concerning property firms’ financing behaviour in emerging economies such as China, and this research prospects to fill this blank.
Language eng
DOI 10.1108/PM-02-2013-0012
Field of Research 149999 Economics not elsewhere classified
Socio Economic Objective 900299 Property
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2014, Emerald Group Publishing
Persistent URL http://hdl.handle.net/10536/DRO/DU:30078476

Document type: Journal Article
Collections: Open Access Collection
Department of Finance
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Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.