Economics at your fingertips  

Political motives of excess leverage in state-owned firms

Oleksandr Talavera (), Shuxing Yin and Mao Zhang
Additional contact information
Shuxing Yin: University of Sheffield
Mao Zhang: University of St Andrews

Discussion Papers from Department of Economics, University of Birmingham

Abstract: This study explores the political motives of excess leverage in state-owned firms. To measure the excess leverage, we follow Gao et al. (2013) to estimate how state firms would behave if they were non-state firms. Using a panel of Chinese firms, we find that, on average, state firms take excess leverage (i.e., overleveraged) compared to otherwise similar non-state firms. Examining the determinants of such leverage difference, our results suggest that the excess leverage of state-owned firms positively relates to regional unemployment pressure and economic pressure faced by municipal politicians. Such effects are more pronounced in local state-owned firms. Our paper provides evidence that government control leads to significant political influence over the real decisions of firms.

Keywords: excess leverage; state-owned firms; political motives; unemployment and economic pressure (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2022-03
New Economics Papers: this item is included in nep-cfn, nep-pol and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

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:

Access Statistics for this paper

More papers in Discussion Papers from Department of Economics, University of Birmingham Contact information at EDIRC.
Bibliographic data for series maintained by Oleksandr Talavera ().

Page updated 2023-09-25
Handle: RePEc:bir:birmec:22-04