Political Patronage and Capital Structure in China

Yan Dong (), Zhentao Liu, Zhe Shen and Qian Sun

Emerging Markets Finance and Trade, 2014, vol. 50, issue 3, 102-125

Abstract: 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.

Keywords: capital structure; China; emerging markets; leverage (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://mesharpe.metapress.com/link.asp?target=contribution&id=G61155603P267108 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:50:y:2014:i:3:p:102-125

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().