Government Ownership and the Capital Structure of Firms: Analysis of an Institutional Context from China

Xiaohong Huang, Rezaul Kabir, Lingling Zhang

    Research output: Contribution to journalArticleAcademicpeer-review

    18 Citations (Scopus)
    469 Downloads (Pure)


    Emerging economies provide interesting scenarios for examining how institutional context influences the financing behavior of firms. In this study, we examine the capital structure of Chinese listed firms following the Split-Share Structure Reform of 2005. This reform allowed a reduction of government ownership by making government shares tradable. We find that the impact of government ownership on leverage is dependent on whether the government is the largest shareholder in a firm and whether the government ownership is through a parent state-owned enterprise. In addition, we document that the largest non-government shareholder positively influences leverage. Overall, our results reveal that the largest controlling shareholder, either government or non-government, has a significant impact on the capital structure of Chinese firms.
    Original languageEnglish
    Pages (from-to)171-185
    Number of pages15
    JournalChina Journal of Accounting Research
    Issue number3
    Early online date9 Aug 2018
    Publication statusPublished - 1 Sept 2018
    Event2017 Summer Research Workshop of China Journal of Accounting Research - City University of Hong Kong, Hong Kong , Hong Kong
    Duration: 21 Jul 201722 Jul 2017


    • Capital structure
    • China
    • Government ownership
    • Leverage
    • Ownership

    Cite this