Determinants of the capital structure of Chinese non-listed enterprises: Is TFP efficient? |
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Authors: | Dongyang Zhang Deqiang Liu |
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Institution: | 1. School of Economics, Capital University of Economics and Business, Zhangjialukou-121, Fengtai District, Beijing, 10070, China;2. Graduate School of Economics, Kyoto University, Yoshida-honmachi, Sakyo-ku, Kyoto, 606-8501, Japan |
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Abstract: | This paper investigates the relationship between TFP (Total Factor Productivity) and leverage measures (total, short-term and long-term leverage) of Chinese non-listed firms during the period 1999–2007. First, TFP is significantly and positively associated with the three leverage measures of private and foreign owned enterprises, but insignificantly correlated with state-owned enterprises. Second, financial constraints, leverage costs, and the institutional environment can affect the relation between TFP and leverage; this relation tends to be much stronger when enterprises face stronger financial constraints, higher leverage costs, and an underdeveloped institutional environment. Third, we show that TFP also plays a significant and positive role on formal and informal leverage. Our research offers new evidence that TFP is an important determinant of capital structure choices. |
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Keywords: | G18 G32 Capital structure Tfp Financial constraints Institutional structure Cost of debt Chinese non-listed firms |
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