Political patronage and capital structure in China

• Autores: Yan Dong, Zhentao Liu, Zhe Shen, Qian Sun
• Localización: Emerging Markets Finance & Trade, ISSN-e 1558-0938, Vol. 50, Nº. 3, 2014, págs. 102-125
• Idioma: inglés
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• Resumen

  • In this paper, we empirically examine the determinants of capital structure in China, using 1,006,395 firm-year observations spanning 1998-2007. Consistent with the general findings in developed markets, we find that the long-term debt ratio is positively related to firm size and asset tangibility while negatively related to profitability and growth opportunities. We also conclude that the long-term debt ratio is positively related to state ownership and legal-person institutional ownership, consistent with the political patronage hypothesis that firms in which the government has more of a stake are more likely to incur long-term debts. These results are robust to a battery of validity checks