Mean reverting financial leverage: theory and evidence from Pakistan

Grounding concepts of the two competing theories of capital structure (trade-off theory, pecking order theory) are quite opposite to each other. Trade-off theory claims that there is an optimal (target) capital structure and firms try to achieve that optimal (target) point. Whereas pecking order theory argues that there is no optimal (target) capital structure but the firms follow a specific pattern of financing. Using the two competing theoretic frameworks, this study applies Fisher-type panel unit root test to an unbalanced panel data of 13 115 firm-year observations of nonfinancial firms listed on Karachi Stock Exchange Pakistan spread over 38 years (1973–2010). Overall panel test results, for short-term, long-term, as well as total leverage support trade-off financing behaviour while individual firm results do not. Individual firm results show that only 16% of the firms have short-term target, 25% of the firms have long-term target and 12% of the firms have total target leverage ratio. Further, industry results explain that most of the industries do have target leverage ratios and classification of data into profitable and lossmaking firm-year observations explains that profitable firms clearly follow trade-off financing behaviour while the results for lossmaking firms do not support trade-off financing behaviour. Our study indicates that it is important for the government to ensure policies to develop well-balanced financial markets and to improve accountability systems.     

家族企业资本结构对经营绩效影响的实证研究——以深圳市上市家族企业为例

上市家族企业资本结构与企业经营绩效之间存在复杂关系,基于我国深圳市上市家族企业相关数据,借助回归分析法及相关系数法,本文分析得出以下结论:深圳市上市家族企业资本结构与每股收益之间存在负相关关系;资本结构与摊薄净资产收益率之间存在强的正相关关系;资本结构与每股经营现金流之间存在负相关关系但不明显。同时根据深圳市上市家族企业的实际情况及实证结论,完善家族企业公司治理结构,应该从金融体系的建立、融资结构的安排及融资期限的协调等方面入手。     

How Does the Minimum Wage Affect Firm Investments in Fixed and Human Capital? Evidence from China

This paper empirically analyzes the impact of Chinese minimum wage regulations on the firm decision to invest in physical and human capital. We exploit the geographical and inter‐temporal variations of county‐level minimum wages in a panel data set of all state‐owned and all above‐scale non‐state‐owned Chinese firms covering the introduction of the new Chinese minimum wage regulations in 2004. In our basic regressions including all Chinese firms, we find significant negative effects of the minimum wage on human capital investment rates and no overall effects on fixed capital investment rates. When grouping firms by their ownership structure, we find that these results hold for most firms. Foreign‐owned firms are an exception to some extent, because the likelihood that they invest in human capital has not decreased in response to the policy.     

资本结构与产品市场竞争强度

资本结构与产品市场竞争之间的关系 ,涉及公司金融学和产业经济学两个过去不相关的学术领域。本文对此提出了一个理论假设并建立了相关的经济模型 ,目的是检验企业的资本结构决策与其在产品市场上的竞争战略之间的关系。理论分析表明 ,企业的资本结构选择作为企业向市场发出的一项承诺 ,它向行业内的其他企业表示企业的竞争行为将更加强硬或更加温和 ,即它具有显著的信号发送功能 ,同时能够产生战略效应。企业的资本结构与其所在的产品市场上的竞争强度之间具有显著的正相关关系。我们以深、沪两地的上市公司为例进行的实证研究有效地支持了我们上述的假设。这对企业经营战略的制订与实施具有重要的启示。     

The impact of financial liberalization on capital structure adjustment in Pakistan: a doubly censored modelling

The purpose of the study is to explain adjustment rate towards target capital structure of Pakistani nonfinancial listed firms and to investigate the impact of financial liberalization (FL) on capital structure adjustment rate. We control for the unobserved heterogeneity and the fractional nature of adjustment rate by applying an unbiased dynamic panel fractional estimator on an unbalanced panel data of Pakistani nonfinancial firms listed during 1972–2010. We find that these firms adjust at an annual rate of 24–51% to reach their capital structure targets. We argue that in order to optimize the benefits of FL the government should strengthen financial as well as judicial institutions to enforce the creditors’ rights that will enable access to more options to Pakistani firms to raise cheaper external financing.     

Environmental liability and the capital structure of firms

This paper analyses the impact of environmental liability regimes on the capital structure of firms. We show that imposing environmental liability only on polluting firms, with limited liability, increases use of bank debt. Extending environmental liability to banks lowers bank borrowing relative to liability only on firms, with an ambiguous effect relative to no liability. Using US industry-level data we estimate a reduced-form model of bank borrowing by firms and show that the introduction of environmental liability only on firms increased bank borrowing by 15–20%, but when liability was extended to banks, borrowing returned to a level slightly higher than with no liability.     

The dynamic adjustment towards target capital structures of firms in transition economies*

We examine the capital structure dynamics of Central and Eastern European firms to get a better understanding of the quantitative and qualitative development of the financial systems in this region. The dynamic model used endogenizes the target leverage as well as the adjustment speed. It is applied to microeconomic data for ten countries. We find that during the transition process, firms generally increased their leverage, lowering the gap between the actual and the target leverage. Profitability and age are the most robust determinants of capital structure targets. Although banking system development has in general enabled firms to get closer to their leverage targets, information asymmetries between firms and banks are still relatively large. As a result, firms prefer internal finance above bank debt and adjust leverage only slowly.     

人力资本及其结构视角下企业现金股利分配研究

人力资本作为企业获得竞争优势的重要因素之一,对企业的行为会产生显著影响。本文以2009-2020年中国A股上市企业为样本,探讨人力资本及高级人力资本结构对企业现金股利分配的影响。研究发现,人力资本投入及高级人力资本结构会显著减少企业现金股利分配。在经过一系列稳健性检验后,结论依然成立。进一步分析中发现,在人力资本较为密集的企业中,现金股利分配更少或企业更不倾向于分配现金股利;融资约束和《会计准则第9号—职工薪酬》的修订皆强化了人力资本及高级人力资本结构与现金股利分配间的负向关系。本文将劳动经济学理论同公司金融相结合,从人力资本的“正面”视角发现了中国企业“低股利”现象之谜。     

我国民营与国有上市公司投资价值的比较研究

鉴于学界在民营与国有上市公司的绩效、治理结构和投资价值上存在较大的争议,本文对2000年底前上市的1 026个公司在2001-2003年间的数据进行了全面的比较分析,发现:(1)民营上市公司的投资收益和账面值-市值比显著小于国有上市公司,因此具有较低的投资价值.(2)与国有上市公司相比,民营上市公司的盈利能力、发展潜力、资本运营能力和尝债能力均较低,但其股权结构较为分散,而且其经理层激励方式与国有上市公司差别不大.(3)民营上市公司投资价值较差的根源在于其盈利能力、发展潜力和资产运营能力较低.(4)与杨兴君、苏启林及张俊喜和张华的实证结果不同,民营与国有上市公司在股权结构、经理层激励、企业规模及地理位置上的差别无法解释两者投资价值的差异.在上述实证结果的基础上,本文提出了相关的政策建议.     

Taxation and Capital Structure Choice: The Role of Ownership

Applying firm fixed‐effects estimations to European firm‐level data, I analyze how ownership structure affects the relationship between taxation and capital structure. I find that an increase in the corporate tax rate affects the debt‐to‐assets ratio positively, and that this effect is stronger for firms with concentrated ownership. These results hold independently of whether firms are standalone or subsidiaries, and are also valid if subsidiaries are divided into those that are foreign‐owned and those domestically owned. Lastly, ownership plays a role even when controlling for other potentially important determinants of the relation between corporate taxation and capital structure.     

Brand capital and firm value

We study the role of brand capital – a primary form of intangible capital – for firm valuation and risk in the cross section of publicly traded firms. Using an empirical measure of brand capital stock constructed from advertising expenditures accounting data, we show that: (i) firms with low brand capital investment rates have higher average stock returns than firms with high brand capital investment rates, a difference of 5.2% per annum; (ii) more brand capital intensive firms have higher average stock returns than less brand capital intensive firms, a difference of 5.1% per annum; and (iii) investment in both brand capital and physical capital is volatile and procyclical. A neoclassical investment-based model in which brand capital is a factor of production subject to adjustment costs matches the data well. The model also provides a novel explanation for the empirical links between advertising expenditures and stock returns around seasoned equity offerings (SEO) documented in previous studies.     

The firm information environment and capital structure: international evidence

This article investigates the effect of the firm information environment, characterized by the analyst characteristics, on firms’ capital structure choices and whether this effect varies according to country-level institutional environments. Using a comprehensive international data set that covers 19 939 firms across 41 countries between 2000 and 2010, we document two key findings. First, firms with lower analyst coverage, higher forecast dispersion and higher forecast errors have higher leverage. Second, the effect of the firm information environment on corporate leverage is attenuated in countries with stronger governance mechanism and better information transparency. This result suggests that a firm’s information environment is an important factor influencing its capital structure decision and that country-level institutional environments matter to this effect.     

产品市场竞争与资本结构动态调整

本文利用中国上市公司1999—2004年的数据,对产品市场竞争及其变化与资本结构动态调整之间的关系进行了探讨。实证研究的结果表明,无论是从静态角度还是动态角度,产品市场竞争对公司资本结构偏离目标资本结构水平都产生了显著影响,公司所在的产品市场竞争越激烈,公司资本结构偏离目标资本结构的幅度越小;同时,在产品市场竞争强度趋向更加激烈时,资本结构表现出向目标资本结构接近的趋势。但是,产品市场竞争的动态变化与资本结构调整速度的调整状况是相互独立的,互不影响的。     

Capital structure in South Korea: a quantile regression approach

Knowledge of how South Korean firms choose their capital structures has particular value due to the country's specific corporate structure and the role of leverage in the evolution of its financial crisis of 1997 and recovery. Using a large panel for the years 1992–2001, we investigate the evolution and determinants of Korean firms' capital structure and focus on differences between firms in different quantiles of the debt–capital distribution. Conditional quantile regressions show that while variables associated with standard models of asymmetric information costs are significant throughout the distribution, there are considerable differences, including differences in sign, in their impact on firms with different degrees of leverage. Those observed nonlinearities in the determinants of capital structure are consistent with a model of capital structure that includes both costs resulting from asymmetric information and an upper bound on the debt–capital ratio.     

公司资本结构动态调整的实证研究

由于交易成本的存在,公司资本结构的调整应是一个动态过程。以我国上市公司数据为样本,采用动态面板数据的系统GMM估计。实证分析我国上市公司资本结构动态调整的成本和影响因素。实证结果表明,我国公司资本结构调整的成本较低,主要归因于中国企业债券市场极其不发达,企业债务绝大部分是由商业信用和银行贷款等私债组成,因此,大力发展资本市场,完善资本市场法律制度建设对我国上市公司资本结构调整有重大意义。     

Capital structure and institutional setting: a decompositional and international analysis

The legal and institutional setting is more and more influential in firms’ financial decisions. Our article analyses firms’ capital structure in an international framework in order to assess the different level of debt use across countries and to identify both common and differential explanatory factors. Although the level of financial leverage is quite different, the factors that have traditionally driven capital structure decisions have much in common in all the legal and institutional settings. The performance and size of the firm, the assets tangibility and the growth opportunities have a relevant but differential effect across the different institutional systems. Consequently, our results suggest that the legal and institutional system of each country does not only affect firms’ capital structure but also creates the conditions to explain a differential effect of the common determinants of firms’ financial choices.     

Regional variation in the capital structure adjustment speed of listed firms: Evidence from China

This paper investigates whether in China, a country large in size, geographically diverse and imbalanced in regional economic development, variation in firm capital structure¹ is systematically related to regional economic environment. In addition, we examine whether during macroeconomic recovery there is significant difference in the speed of adjustment in capital structure of firms located in different regions. The empirical analyses are based on 783 firms listed on Shanghai and Shenzhen Stock Exchanges during a sample period of year 2000 through 2014. Using GMM and Logit QMLE, we found strong evidence that the regional variation in the capital structure of listed firms is linked to growth indicator (the Market-to-Book value, MB), EBIT ratio, size of the firm and tangible assets (the value of Net Property, Plant and Equipment, PPE). In the process of economic recovery, there was apparent regional variation in the speed of adjustment in capital structure, i.e. the fastest adjustment in capital structure was found in East China while that of West China followed and that of Mid China the slowest, that is to say within a given period the leverage ratio of listed firms in East China rises or falls faster than in the other two regions.     

State-owned enterprises going public The case of China

Public listing is a key reform measure for large state‐owned enterprises (SOEs) in China. We find evidence that public listing lowers state ownership significantly, lessens firms’ reliance on debt finance, and allows firms to increase capital expenditure, at least temporarily. We also find that ownership structure affects post‐listing performance. However, we find no statistical evidence of a positive effect of public listing on firms’ profitability. We suggest alternative interpretations of the last finding.     

Corporate Finance in Africa: The Interactive Impact of Firm Nationality and Characteristics

Using a balance panel data of 351 publicly quoted firms in eleven major African stock exchanges, I investigated the impact of the differences in the internal structures of domestic and foreign firms on corporate financial decisions in Africa. I also analyzed the sensitivity of the impact of the internal firm characteristic on changes in the level of exogenous factors such as marginal tax structure and financial system development. The arising results showed that among the selected key internal characteristics of firms, only the impact of profitability and tangibility on financial structure was significantly sensitive to the proportion of domestic/foreign shareholding and that, consistent with capital structure theories, corporate financing decisions in Africa were significantly sensitive to marginal tax policies and the degree of financial system development prevailing in a country. The results suggest that by investing in assets that are acceptable to lenders and investors as collaterals and maintaining reasonable stability in their cash flow positions, domestic firms can in practice enhance their access to strategic investment capital.     

人力资源管理系统影响企业绩效的中介机理

基于205家企业的调查数据,采用结构方程模型,对人力资本和组织氛围影响企业绩效的中介作用进行了检验。结果显示:人力资本是人力资源管理系统中"选"、"育"实践影响企业绩效的完全中介变量,是"用留"实践影响企业绩效的部分中介变量;组织氛围不是人力资源管理系统影响企业绩效的中介变量;"用留"实践对企业绩效的直接效应最显著。这表明,企业较重视人力资本的价值创造作用,而对工作氛围的价值创造作用关注不够。