Capital structure of Chinese listed SMEs: an agency theory perspective

Huang, Wei; Boateng, Agyenim; Newman, Alexander

Abstract

Prior work examining the antecedents of capital structure for small and medium-sized enterprises in emerging markets is limited. This paper sheds light on how the corporate governance mechanisms adopted by firms on the newly established Growth Enterprise Market (GEM) in China influence their use of debt. We find that the financial leverage of GEM firms is positively influenced by executives’ shareholding and their excess cash compensation. Ownership concentration appears to reduce leverage, whereas the percentage of tradable shares increases leverage. In contrast, institutional investors’ shareholding does not influence the level of debt. Traditional factors such as tax and operating cash flow are insignificant in explaining the debt levels among GEM firms.

Citation

Huang, W., Boateng, A., & Newman, A. (2016). Capital structure of Chinese listed SMEs: an agency theory perspective. Small Business Economics, 47(2), https://doi.org/10.1007/s11187-016-9729-6

• Journal Article Type: Article
• Acceptance Date: Mar 23, 2016
• Online Publication Date: May 2, 2016
• Publication Date: Aug 30, 2016
• Deposit Date: Jun 29, 2018
• Publicly Available Date: Jun 29, 2018
• Journal: Small Business Economics
• Print ISSN: 0921-898X
• Electronic ISSN: 1573-0913
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• Volume: 47
• Issue: 2
• DOI: https://doi.org/10.1007/s11187-016-9729-6
• Keywords: Capital structure； Executive compensation； Ownership structure； SMEs China
• Public URL: https://nottingham-repository.worktribe.com/output/803999
• Publisher URL: https://link.springer.com/article/10.1007%2Fs11187-016-9729-6
• Contract Date: Jun 29, 2018