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Capital structure of Chinese listed SMEs: an agency theory perspective

journal contribution
posted on 2016-08-01, 00:00 authored by W Huang, A Boateng, Alexander NewmanAlexander Newman
Prior work examining the antecedents of capital structure for small and medium-sized enterprises in emerging markets is limited. This paper sheds light on how the corporate governance mechanisms adopted by firms on the newly established Growth Enterprise Market (GEM) in China influence their use of debt. We find that the financial leverage of GEM firms is positively influenced by executives’ shareholding and their excess cash compensation. Ownership concentration appears to reduce leverage, whereas the percentage of tradable shares increases leverage. In contrast, institutional investors’ shareholding does not influence the level of debt. Traditional factors such as tax and operating cash flow are insignificant in explaining the debt levels among GEM firms.

History

Journal

Small Business Economics

Volume

47

Issue

2

Pagination

535 - 550

Publisher

Springer

Location

Berlin, Germany

ISSN

0921-898X

eISSN

1573-0913

Language

eng

Publication classification

C Journal article; C1 Refereed article in a scholarly journal

Copyright notice

2016, The Authors