Corporate governance quality and financial leverage: Evidence from China

Mengling Zhou, Kexin Li and Zhongfei Chen

International Review of Financial Analysis, 2021, vol. 73, issue C

Abstract: This study explores the ways of how corporate governance quality affects firms' financial leverage using a panel sample of non-financial listed firms in China during 2000–2018. Empirical results indicate that improved corporate governance quality has a robust and negative effect on financial leverage for the full sample and subsample by ownership, industry, scale, etc. This negative effect is mediated by corporate internal and equity financing. Furthermore, in terms of the corporate performance, we show that financial leverage significantly reduces financial performance, especially during the economic downturn, and it could be offset by the improved corporate governance quality.

Keywords: Corporate governance quality; Financial leverage; Corporate performance; Heterogeneity; Mediator variables (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:73:y:2021:i:c:s1057521920302933

DOI: 10.1016/j.irfa.2020.101652

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