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Capital structure of Chinese listed SMEs: an agency theory perspective

Huang, Wei; Boateng, Agyenim; Newman, Alexander

Capital structure of Chinese listed SMEs: an agency theory perspective Thumbnail


Wei Huang

Agyenim Boateng

Alexander Newman


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.

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 0921-898X
Publisher Springer Verlag
Peer Reviewed Peer Reviewed
Volume 47
Issue 2
Keywords Capital structure? Executive compensation? Ownership structure? SMEs China
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