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Convergence Analysis of Chinese Corporations’ Debt Leverage Utilizing the Nonlinear Time-varying Factor Model

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  • Hailian Xiao
  • Chuanli Zhou
  • Kaijie Zhuang
  • Jin He

Abstract

This study adopts the nonlinear time-varying factor model and the Mann–Kendall non-parametric rank-sequence test to assess the convergence of non-financial listed companies’ debt leverage in China from 1998 to 2017. The results indicate that there is no overall convergence in the debt leverage of non-financial listed companies in China; however, most companies’ debt leverage converges by ratio within different clubs. In addition, the study reveals the heterogeneous characteristics, formation mechanism, and dynamic evolution of corporate leverage convergence, and provides new empirical evidence for “deleveraging” policies and new perspectives for corporate leverage research.

Suggested Citation

  • Hailian Xiao & Chuanli Zhou & Kaijie Zhuang & Jin He, 2021. "Convergence Analysis of Chinese Corporations’ Debt Leverage Utilizing the Nonlinear Time-varying Factor Model," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(7), pages 2065-2078, May.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:7:p:2065-2078
    DOI: 10.1080/1540496X.2020.1870953
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    Cited by:

    1. Xiao, Hailian & Zhao, Ying & Zhou, Meihua, 2022. "Can financial factors affect corporate debt leverage convergence?," Pacific-Basin Finance Journal, Elsevier, vol. 72(C).

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