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The Influences of Ownership Structure: evidence from China

Author

Listed:
  • Bor-Yi Huang
  • Cho-Min Lin
  • Chien-Ming Huang

    (Shih-Chien University, Taiwan
    Providence University, Taiwan
    TamKang University, Taiwan)

Abstract

This paper examines that the impact of firm-specific characteristic on firm capital structure in Chinese-listed companies and attempts to solve a few puzzles existing in previous related studies. The key factors include state ownership, institutional ownership, and the risk of default. From the analyses of all samples, our results confirm that the expected default risk is important in explaining debt decision, but the influence of ownership structure is not significant. However, after separating high- and low-level from the firm leverage we find that the ownerships of state and institutions have a positive effect on corporate leverage in high-leveraged companies but not in low-leveraged firms. In addition, the positive impacts of external governance commonly occur in large firms. The observed findings provide some important implications for the role of external governance in Chinese-listed companies.

Suggested Citation

  • Bor-Yi Huang & Cho-Min Lin & Chien-Ming Huang, 2011. "The Influences of Ownership Structure: evidence from China," Journal of Developing Areas, Tennessee State University, College of Business, vol. 45(1), pages 209-227, July-Dece.
    • Handle: RePEc:jda:journl:vol.45:year:2011:issue1:pp:209-227
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    File URL: http://muse.jhu.edu/journals/journal_of_developing_areas/v045/45.huang.html
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    Citations

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    Cited by:

    1. Nguyen, Thao & Bai, Min & Hou, Greg & Vu, Manh-Chien, 2020. "State ownership and adjustment speed toward target leverage: Evidence from a transitional economy," Research in International Business and Finance, Elsevier, vol. 53(C).
    2. Lewandowski, Piotr & Keister, Roma & Hardy, Wojciech & Górka, Szymon, 2020. "Ageing of routine jobs in Europe," Economic Systems, Elsevier, vol. 44(4).
    3. Surbhi Gupta & Surendra S. Yadav & P. K. Jain, 2024. "Impact of Foreign Ownership on Leverage: A Study of Indian Firms," Global Business Review, International Management Institute, vol. 25(1), pages 51-67, February.
    4. Jimmy, Charles & Falianty, Telisa Aulia, 2021. "Managing leverage of infrastructure projects: Aggregate and sectoral risk effect," Journal of Asian Economics, Elsevier, vol. 73(C).
    5. Xiaojian Hu & Gang Yao & Taiyun Zhou, 2022. "Does ownership structure affect the optimal capital structure? A PSTR model for China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 2458-2480, April.
    6. Ashraf, Dawood & Rizwan, Muhammad Suhail & Azmat, Saad, 2021. "Not one but three decisions in sukuk issuance: Understanding the role of ownership and governance," Pacific-Basin Finance Journal, Elsevier, vol. 69(C).
    7. Thi Phuong Vy Le & Kathy Tannous, 2016. "Ownership Structure and Capital Structure: A Study of Vietnamese Listed Firms," Australian Economic Papers, Wiley Blackwell, vol. 55(4), pages 319-344, December.
    8. Zeitun, Rami & Goaied, Mohamed, 2021. "The nonlinear effect of foreign ownership on capital structure in Japan: A panel threshold analysis," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).

    More about this item

    Keywords

    Capital Structure; Expected Default Risk; State Ownership; Institutional Ownership;
    All these keywords.

    JEL classification:

    • 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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