Social trust and the multi-layered enterprise equity structure

Baoyin Qiu and Bo Cheng

China Journal of Accounting Studies, 2018, vol. 6, issue 1, 45-62

Abstract: Social trust, as an informal mechanism, has an important influence on economic activities. With the Chinese A-share listed companies from 2007 to 2013 as samples, this paper make an examination of the influence of stoical trust on a multi-layered enterprise equity structure and its functioning mechanism. This study shows that the higher the social trust in a region where the enterprise is located, the fewer the layers of enterprise equity structure. Further examination of the functioning mechanism shows that on the one hand, there may be a more obvious phenomenon in a region with a relatively weak legal environment where the layers of enterprise equity structure decrease with the increase of social trust in the region. On the other hand, social trust influences a multi-layered enterprise equity structure by two paths, namely, debt financing cost and credit financing.

Date: 2018
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DOI: 10.1080/21697213.2018.1481629

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