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The impact of supply chain finance on firm capital structure adjustment: Evidence from China

Author

Listed:
  • Ailing Pan

    (School of Management, Shandong University, Jinan, China)

  • Lei Xu

    (UniSA Business, University of South Australia, Adelaide, SA, Australia)

  • Bin Li
  • Runze Ling
  • Luyan Zheng

    (School of Management, Shandong University, Jinan, China)

Abstract

We establish a link between supply chain finance (SCF) and capital structure adjustment by core firms through a data set of listed firms on the Shanghai and Shenzhen Stock Exchanges. We find that SCF can significantly speed up capital structure adjustment, especially for the under-leveraged firms. Enhanced financial strengths and competitive advantages underlie this impact. Comprehensive examinations also suggest that SCF may speed up cash turnovers, lower financing costs, and improve firm values. In addition, the impact is more substantial on firms of smaller sizes, located in better-developed regions, those without bank–firm connections, and those with higher environmental dynamism. However, the impact seems similar on private firms and state-owned enterprises (SOEs), or across industries of various degrees of competition. Our findings bear such policy implications that SCF can accelerate capital structure adjustment and contribute to the quality economic growth in emerging markets. JEL Classification: G31, G32, O33

Suggested Citation

  • Ailing Pan & Lei Xu & Bin Li & Runze Ling & Luyan Zheng, 2023. "The impact of supply chain finance on firm capital structure adjustment: Evidence from China," Australian Journal of Management, Australian School of Business, vol. 48(2), pages 436-462, May.
    • Handle: RePEc:sae:ausman:v:48:y:2023:i:2:p:436-462
    DOI: 10.1177/03128962221092179
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    More about this item

    Keywords

    Capital structure; cash holdings; competitive advantage; core firm; supply chain finance;
    All these keywords.

    JEL classification:

    • 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
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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