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

Xiaohong  Huang; Rezaul Kabir; Lingling Zhang

doi:10.1016/j.cjar.2018.07.001

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 journal › Article › Academic › peer-review

26 Citations (Scopus)

569 Downloads (Pure)

Abstract

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 language	English
Pages (from-to)	171-185
Number of pages	15
Journal	China Journal of Accounting Research
Volume	11
Issue number	3
Early online date	9 Aug 2018
DOIs	https://doi.org/10.1016/j.cjar.2018.07.001
Publication status	Published - 1 Sept 2018
Event	2017 Summer Research Workshop of China Journal of Accounting Research - City University of Hong Kong, Hong Kong , Hong Kong Duration: 21 Jul 2017 → 22 Jul 2017

Keywords

Capital structure
China
Government ownership
Leverage
Ownership

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1016/j.cjar.2018.07.001Licence: CC BY-NC-ND

Huang2018governmentFinal published version, 518 KBLicence: CC BY-NC-ND

Cite this

@article{2635764093d14d10b3d1c9dd55de2339,

title = "Government Ownership and the Capital Structure of Firms: Analysis of an Institutional Context from China",

abstract = "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.",

keywords = "Capital structure, China, Government ownership, Leverage, Ownership",

author = "Xiaohong Huang and Rezaul Kabir and Lingling Zhang",

year = "2018",

month = sep,

day = "1",

doi = "10.1016/j.cjar.2018.07.001",

language = "English",

volume = "11",

pages = "171--185",

journal = "China Journal of Accounting Research",

issn = "1755-3091",

publisher = "Sun Yat-sen (Zhongshan) University",

number = "3",

note = "2017 Summer Research Workshop of China Journal of Accounting Research ; Conference date: 21-07-2017 Through 22-07-2017",

}

TY - JOUR

T1 - Government Ownership and the Capital Structure of Firms

T2 - 2017 Summer Research Workshop of China Journal of Accounting Research

AU - Huang, Xiaohong

AU - Kabir, Rezaul

AU - Zhang, Lingling

PY - 2018/9/1

Y1 - 2018/9/1

N2 - 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.

AB - 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.

KW - Capital structure

KW - China

KW - Government ownership

KW - Leverage

KW - Ownership

UR - http://www.scopus.com/inward/record.url?scp=85051130729&partnerID=8YFLogxK

U2 - 10.1016/j.cjar.2018.07.001

DO - 10.1016/j.cjar.2018.07.001

M3 - Article

SN - 1755-3091

VL - 11

SP - 171

EP - 185

JO - China Journal of Accounting Research

JF - China Journal of Accounting Research

IS - 3

Y2 - 21 July 2017 through 22 July 2017

ER -

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

Abstract

Keywords

UN SDGs

Access to Document

Other files and links

Fingerprint

Government ownership, concentration, and the capital structure of firms: Analysis of an institutional context from China

Cite this