Please use this identifier to cite or link to this item: https://hdl.handle.net/1959.11/5180
Title: Corporate Governance and the Capital Structure of Listed Firms: Evidence from China
Contributor(s): Hovey, Martin  (author)
Publication Date: 2010
Handle Link: https://hdl.handle.net/1959.11/5180
Abstract: The relationship between the capital structure and profitability of listed firms in China is investigated in this paper, in that the leverage, profitability and a firm's ownership structure are studied in detail. It is an exploratory study based on all firms listed on the Shanghai and Shenzhen stock exchanges from 1999 to 2005. The results of the empirical analysis are reported. The most significant finding is that pecking order theory does not appear to hold in China. The order for profitable firms at least is retained earnings, equity finance, and then debt. The first aspect of pecking order theory holds as more profitable firms are able to utilize internal financing, which in consonance with the principle of least resistance, is the preferred channel of financing. The more profitably the firm, the less reliance the firm has on debt. On the other hand, tax shields do not provide an incentive to rely on debt as the pecking order theory would support and infers that debt is the least likely financing source utilised by listed firms in China. Of further economic impact is the finding that the higher the proportion of leverage, the less profitable is the firm. Also of interest is the finding that state has a negative relationship with leverage and that legal person, public and foreign holdings are found to have a positive relationship with the leverage of listed firms in China. This shows that there is a greater reliance on debt financing when there is a move away from state ownership. Both foreign and LP owners are large institutional shareholders in the main and apply leverage monitoring agent. In addition foreign holders are likely to experience information asymmetry problems and thus seek monitoring management decisions though debt.
Publication Type: Conference Publication
Conference Details: 2nd International Conference on Corporate Governance, Sydney, Australia, 7th - 9th February, 2010
Source of Publication: Proceedings of the 2nd International Conference on Corporate Governance
Publisher: University of New England
Place of Publication: Armidale, Australia
Field of Research (FOR): 150203 Financial Institutions (incl Banking)
150205 Investment and Risk Management
150303 Corporate Governance and Stakeholder Engagement
Socio-Economic Objective (SEO): 919999 Economic Framework not elsewhere classified
900201 Administration and Business Support Services
900101 Finance Services
Peer Reviewed: Yes
HERDC Category Description: E1 Refereed Scholarly Conference Publication
Other Links: http://www.une.edu.au/bepp/research/corp-gov-conf/papers/hovey.pdf
Statistics to Oct 2018: Visitors: 171
Views: 185
Downloads: 0
Appears in Collections:Conference Publication
UNE Business School

Files in This Item:
2 files
File Description SizeFormat 
Show full item record

Page view(s)

108
checked on Apr 30, 2019
Google Media

Google ScholarTM

Check


Items in Research UNE are protected by copyright, with all rights reserved, unless otherwise indicated.