Robust and fragile firm-specific determinants of the capital structure of Chinese firms

Imad Moosa, Larry Li and Tony Naughton

Applied Financial Economics, 2011, vol. 21, issue 18, 1331-1343

Abstract: We demonstrate, using Extreme Bounds Analysis (EBA), that some of the firm-specific determinants of the capital structure of Chinese firms reported as important in previous studies may be fragile, in the sense that the sign and/or significance of the coefficients on these variables change depending on model specification (the variables included in or excluded from the model). For this purpose, data on 344 publicly listed shareholding companies are used, covering nine potential firm-specific determinants of capital structure. The robust variables, whose coefficients remain significant and of the same sign irrespective of model specification, turn out to be size, liquidity, profitability and growth opportunities. Although conventional cross-sectional analysis would lend support to the importance of tangibility and stock price performance, these two variables are indeed fragile. Other variables turn out to be insignificant.

Keywords: extreme bounds analysis; capital structure; trade-off theory; pecking order theory (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/09603107.2011.570714 (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:taf:apfiec:v:21:y:2011:i:18:p:1331-1343

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAFE20

DOI: 10.1080/09603107.2011.570714

Access Statistics for this article

Applied Financial Economics is currently edited by Anita Phillips

More articles in Applied Financial Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().