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Board member age, stock seasoning and the evolution of capital structure in Chinese firms

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  • McGuinness, Paul B.

Abstract

This study examines the evolution of capital structure for Chinese stock issuers over an eleven-year period, stretching three years pre- to eight years post-listing. The paper scrutinizes the role of a key demographic in this seasoning process: The age of board officers. The present study’s key postulate is that board age proxies for a firm’s growth options. While issuer indebtedness exhibits little to no connection with other board properties, a strong inverse association exists with officer age. Moreover, entities with older boards experience notably smaller contractions in leverage on listing, as well as more subdued upswings post-IPO. Results are congruent with older board firms possessing fewer growth options and raising less capital at IPO. Additionally, study findings suggest that the Global Financial Crisis delayed Chinese firms’ re-leveraging adjustments post-IPO. Finally, changes to leverage at IPO, and in the years thereafter, appear similar for both hot- and cold-market issuers.

Suggested Citation

  • McGuinness, Paul B., 2021. "Board member age, stock seasoning and the evolution of capital structure in Chinese firms," International Business Review, Elsevier, vol. 30(3).
    • Handle: RePEc:eee:iburev:v:30:y:2021:i:3:s0969593120301189
    DOI: 10.1016/j.ibusrev.2020.101769
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    5. Fabrizio Rossi & Richard J. Cebula & James R. Barth, 2018. "Female representation in the boardroom and firm debt: empirical evidence from Italy," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 42(2), pages 315-338, April.
    6. Ampenberger, Markus & Schmid, Thomas & Achleitner, Ann-Kristin & Kaserer, Christoph, 2009. "Capital structure decisions in family firms: empirical evidence from a bank-based economy," CEFS Working Paper Series 2009-05, Technische Universität München (TUM), Center for Entrepreneurial and Financial Studies (CEFS).
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    More about this item

    Keywords

    Board member age; Corporate leverage; Stock seasoning; Chinese issuers; Hong Kong; hot-issue markets;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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