The determinants of capital structure: Evidence from China

Guihai Huang; Frank M. Song

doi:10.1016/j.chieco.2005.02.007

The determinants of capital structure: Evidence from China

Guihai Huang, Frank M. Song

Research output: Contribution to journal › Article › peer-review

410 Citations (Scopus)

Abstract

This paper employs a new database containing the market and accounting data (from 1994 to 2003) from more than 1200 Chinese-listed companies to document their capital structure characteristics. As in other countries, leverage in Chinese firms increases with firm size and fixed assets, and decreases with profitability, non-debt tax shields, growth opportunity, managerial shareholdings and correlates with industries. We also find that state ownership or institutional ownership has no significant impact on capital structure and Chinese companies consider tax effect in long-term debt financing. Different from those in other countries, Chinese firms tend to have much lower long-term debt.

Original language	English
Pages (from-to)	14-36
Number of pages	23
Journal	China Economic Review
Volume	17
Issue number	1
DOIs	https://doi.org/10.1016/j.chieco.2005.02.007
Publication status	Published - 2006
Externally published	Yes

Keywords

Capital structure
China capital market
State owned enterprises
Tax effect

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10.1016/j.chieco.2005.02.007

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title = "The determinants of capital structure: Evidence from China",

abstract = "This paper employs a new database containing the market and accounting data (from 1994 to 2003) from more than 1200 Chinese-listed companies to document their capital structure characteristics. As in other countries, leverage in Chinese firms increases with firm size and fixed assets, and decreases with profitability, non-debt tax shields, growth opportunity, managerial shareholdings and correlates with industries. We also find that state ownership or institutional ownership has no significant impact on capital structure and Chinese companies consider tax effect in long-term debt financing. Different from those in other countries, Chinese firms tend to have much lower long-term debt.",

keywords = "Capital structure, China capital market, State owned enterprises, Tax effect",

author = "Guihai Huang and Song, {Frank M.}",

note = "Funding Information: We thank Chong-en Bai, Chun Chang, Joe Lu, Keith Wong, Jack Zhang, the anonymous referee and participants in the economics and finance workshop held at the University of Hong Kong, at the conference on China and World in the 21st Century held at Hong Kong Baptist University, and at the 14th Association for Chinese Economic Studies (ACES) Annual Conference held at the University of Sydney for helpful comments and Xia Li for excellent research assistance. We also thank Tom Hughes Wilhelm at MUST for editing assistance. The paper is partially funded by grants from Shanghai Stock Exchange. Guihai Huang also acknowledges the financial support of an HKU-PRC Swire doctoral scholarship and a research grant given by the Macao Foundation in 2004.",

year = "2006",

doi = "10.1016/j.chieco.2005.02.007",

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AU - Song, Frank M.

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PY - 2006

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N2 - This paper employs a new database containing the market and accounting data (from 1994 to 2003) from more than 1200 Chinese-listed companies to document their capital structure characteristics. As in other countries, leverage in Chinese firms increases with firm size and fixed assets, and decreases with profitability, non-debt tax shields, growth opportunity, managerial shareholdings and correlates with industries. We also find that state ownership or institutional ownership has no significant impact on capital structure and Chinese companies consider tax effect in long-term debt financing. Different from those in other countries, Chinese firms tend to have much lower long-term debt.

AB - This paper employs a new database containing the market and accounting data (from 1994 to 2003) from more than 1200 Chinese-listed companies to document their capital structure characteristics. As in other countries, leverage in Chinese firms increases with firm size and fixed assets, and decreases with profitability, non-debt tax shields, growth opportunity, managerial shareholdings and correlates with industries. We also find that state ownership or institutional ownership has no significant impact on capital structure and Chinese companies consider tax effect in long-term debt financing. Different from those in other countries, Chinese firms tend to have much lower long-term debt.

KW - Capital structure

KW - China capital market

KW - State owned enterprises

KW - Tax effect

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JO - China Economic Review

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The determinants of capital structure: Evidence from China

Abstract

Keywords

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