Firm leverage and the private benefits of control in Chinese firms

Zhang Zhaoguo, He Weifeng and Chen Jing

Afro-Asian Journal of Finance and Accounting, 2008, vol. 1, issue 1, pages 6-16

Abstract: This study investigates the relationship between capital structure and the private benefits of control of listed Chinese firms. A sample of firms listed on the Chinese stock markets is used to estimate the private benefits of control. The private benefits of control are approximately 18% (on average) in China. There is a statistically significant negative relationship between Short-Term Debt (STD) and the private benefits of control. In addition, a positive relationship exists between Long-Term Debt (LTD) and the private benefits of control. Finally, a statistically significant negative relationship exists between total debt and the private benefits of control.

Keywords: capital structure; private benefits of control; minority stockholder protection; Chinese firms; China; short-term debt; total debt; control transactions; controlling interest; controlling shareholders; finance (search for similar items in EconPapers)
Date: 2008
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