The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms

Boateng, Agyenim, Cai, Huifen (Helen), Borgia, Daniel, Gang Bi, Xiao and Ngwu, Franklin Nnaemeka (2017) The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms. Review of Accounting and Finance, 16 (4). pp. 444-461. ISSN 1475-7702 (doi:10.1108/raf-12-2015-0193)

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Abstract

Purpose: This paper examines the effects of internal corporate governance mechanisms on the capital structure decisions of Chinese listed firms.

Design/Methodology: Using a large and more recent dataset consisting of 2386 Chinese listed firms over the period from 1998 to 2012, we employ panel data and use different statistical methods (OLS, fixed effects, and system GMM) to analyse the effects of firm-specific and corporate governance influences on capital structure.

Findings: We find that the proportion of independent directors and ownership concentration exert significant influence on the level of Chinese long-term debt ratios after controlling for firm-specific determinants and split share reforms. Further analysis separating our sample into state-owned enterprises (SOEs) and privately- owned enterprises (POEs) suggests that ownership concentration in the hands of the state leads to decrease in debt ratios.

Implications: The finding implies that concentrated ownership in the hands of the state appears more efficient compared to their private counterparts in their monitoring role.

Original Value: This study extends prior literature, which has concentrated disproportionately on firm-specific influences on capital structure, to the effects of within-firm governance mechanisms on capital structure decisions. The paper contributes to the agency theory-capital structure discourse in an emerging country context where corporate governance system appears weak.

Item Type: Article
Research Areas: A. > Business School > International Management and Innovation
Item ID: 22263
Notes on copyright: This is the accepted version of the manuscript "The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms", published in the journal "Review of Accounting and Finance" available via the journal site at: https://doi.org/10.1108/raf-12-2015-0193. This article is © Emerald Publishing Limited and permission has been granted for this version to appear here. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.
Useful Links:
Depositing User: Helen Cai
Date Deposited: 20 Jul 2017 15:31
Last Modified: 14 Nov 2019 21:19
URI: https://eprints.mdx.ac.uk/id/eprint/22263

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