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Full-Text Articles in Social and Behavioral Sciences
The Effect Of Ownership Structure On Leverage Decision: New Evidence From Chinese Listed Firms, Qigui Liu, Gary Tian, Xiaoming Wang
The Effect Of Ownership Structure On Leverage Decision: New Evidence From Chinese Listed Firms, Qigui Liu, Gary Tian, Xiaoming Wang
Qigui Liu
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 …
Controlling Shareholders Expropriation And Firms Leverage Decision: Evidence From Chinese Non-Tradable Share Reform, Qigui Liu, Gary Tian
Controlling Shareholders Expropriation And Firms Leverage Decision: Evidence From Chinese Non-Tradable Share Reform, Qigui Liu, Gary Tian
Qigui Liu
This paper examines the effect of excess control rights on the leverage decisions made by Chinese non-SOEs before and after the Non-tradable share reform (NTS reform). We find that firms with excess control rights have more excess leverage and their controlling shareholders use the resources for tunneling rather than investing in positive NPV projects. We also find that excess leverage in firms with excess control rights decreases and the market reaction to announcements of related party transactions are more positive after NTS reform. This confirms that tunneling by the controlling shareholders actually reduced. We argue that in emerging markets where …