Supply-side structural reform and dynamic capital structure adjustment: Evidence from Chinese-listed firms

Xiaochen Jiang, Jim Huangnan Shen, Chien-Chiang Lee () and Chong Chen

Pacific-Basin Finance Journal, 2021, vol. 65, issue C

Abstract: The literature extensively discusses the increasing commitment toward comprehensive structural reform of China's economy as it targets to achieve high quality and sustainable economic growth. This research investigates the inherent relationship between supply-side structural reform (SSSR) and dynamic capital structure adjustment in Chinese-listed firms. Our results show that SSSR's introduction has significantly improved the adjustment speed toward the optimal debt ratio, especially for firms with high indebtedness and low investment performance. Importantly, China's bond market plays a crucial role through SSSR for firms' debt ratio to adjust toward their optimal level. However, there is no such evidence among state-owned enterprises (SOEs), suggesting that the structural reform concerning corporate capital structure for SOEs is more challenging and longstanding when compared with non-SOEs.

Keywords: Supply-side structural reform; Dynamic capital structure adjustment; Optimal debt ratio; Bond market development; SOEs (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:65:y:2021:i:c:s0927538x20306946

DOI: 10.1016/j.pacfin.2020.101482

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