The inner structure of pyramid and capital structure: Evidence from China

Kun Su

No 2014-5, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper examines the relationship between capital structure and the inner structure of pyramid in an emerging market economy country. The author uses firm-level panel data of Chinese listed companies to analyze the influence of the inner structure of pyramid on capital structure and the differences between different institutional environments of that influence deeply. His results show that the longer the layers of pyramid structure, the stronger the leverage effect of pyramid structure, as well as the ultimate controllers' motivation to expand debt financing will be. So the layers of pyramid structure have a significantly positive effect on capital structure. However, the chains of pyramid structure have no significant effects on capital structure. Compared with the areas with poor institutional environment, in the areas with better institutional environment, the effects of the layers of pyramid structure on corporate capital structure is relatively small.

Keywords: pyramid structure; institutional environment; capital structure; agent chain (search for similar items in EconPapers)
JEL-codes: G32 G38 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-sog and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www.econstor.eu/bitstream/10419/91496/1/777365189.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:20145

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