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Firm’s aging perception and debt leverage: A textual analysis

Author

Listed:
  • Wang, Qin
  • Liu, Tong
  • Kong, Dongmin
  • Zhang, Wenzhe

Abstract

This paper examines the effect of firms’ perceptions of population aging on corporate capital structure at the firm level. We construct a novel aging indicator for firms using textual analysis of the annual reports of China’s A-share listed firms. We find that firms perceiving greater aging tend to have lower leverage. This negative impact exhibits heterogeneity, with a more pronounced effect observed among non-state-owned enterprises, those located in areas with advanced economic development, as well as among labor-intensive and non-high-tech firms. The plausible mechanisms involve operating risks and financing constraints. Additionally, automation, as a way of factor substitution to address demographic changes, may alleviate the resulting negative impact on leverage. By revealing the significant effect of aging on corporate financing decisions, our study has clear implications for firms and regulators concerned with this demographic transition and improves the understanding of the sociodemographic influence on corporate activities.

Suggested Citation

  • Wang, Qin & Liu, Tong & Kong, Dongmin & Zhang, Wenzhe, 2025. "Firm’s aging perception and debt leverage: A textual analysis," Journal of International Money and Finance, Elsevier, vol. 153(C).
    • Handle: RePEc:eee:jimfin:v:153:y:2025:i:c:s0261560625000300
    DOI: 10.1016/j.jimonfin.2025.103295
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    More about this item

    Keywords

    Aging; Corporate debt leverage; Textual analysis;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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