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How Does Organization Capital Alleviate SMEs’ Financial Constraints? Evidence from China

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  • Mian Cheng
  • Li Ji
  • Zijian Xu

Abstract

This study investigates whether and how organization capital affects corporate financial constraints faced by Chinese small- and medium-sized enterprises (SMEs). Using SMEs listed on the Shenzhen Stock Exchange from 2001 to 2019, we find that organization capital significantly alleviates corporate financial constraints and that information asymmetry and operational efficiency are two possible mediators of the relationship. This effect is more pronounced for high-tech and growth-stage firms, consistent with the said mediation effect. Besides, we perform propensity score matching, instrumental variable regressions, and several robustness checks to address possible endogeneity concerns and measurement errors.

Suggested Citation

  • Mian Cheng & Li Ji & Zijian Xu, 2022. "How Does Organization Capital Alleviate SMEs’ Financial Constraints? Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(12), pages 3541-3553, September.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:12:p:3541-3553
    DOI: 10.1080/1540496X.2022.2057846
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    Cited by:

    1. Xu, Shen & Yin, Bichao & Lou, Chunjie, 2022. "Minority shareholder activism and corporate social responsibility," Economic Modelling, Elsevier, vol. 116(C).
    2. Dingzu Zhang & Luqi Liu, 2022. "Does ESG Performance Enhance Financial Flexibility? Evidence from China," Sustainability, MDPI, vol. 14(18), pages 1-22, September.

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