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Financing behavior of firms in tranquil and crisis period: Evidence from China

Author

Listed:
  • Sultan Sikandar Mirza
  • Khalil Jebran
  • Yu Yan
  • Amjad Iqbal

Abstract

This study investigates the financing behavior of Chinese firms in tranquil and crisis situation over the period 2002–2014. We divide the sample into three sub-periods; pre-crisis, during-crisis, and post-crisis. The results indicate some noteworthy findings as this study incorporates firm and country-level factors. We find that the firms’ financing choice depends on the market conditions. The results show that Chinese firms have significantly decreased their dependence on leverage after the eruption of global financial crisis. Furthermore, we find that financial crisis of 2007–2008 has significantly affected the explanatory power of all factors. Moreover, profitability, size, and liquidity are important factors determining capital structure of the firm in financial crisis period.

Suggested Citation

  • Sultan Sikandar Mirza & Khalil Jebran & Yu Yan & Amjad Iqbal, 2017. "Financing behavior of firms in tranquil and crisis period: Evidence from China," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1339770-133, January.
    • Handle: RePEc:taf:oaefxx:v:5:y:2017:i:1:p:1339770
    DOI: 10.1080/23322039.2017.1339770
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    References listed on IDEAS

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