The capital structure of Chinese listed firms: is manufacturing industry special?

C-B. Tse, Timothy Rodgers

    Research output: Contribution to journalArticle

    6 Citations (Scopus)


    Purpose – The purpose of this paper is to examine whether or not industry membership can explain the leverage of Shanghai listed firms prior to the 2007 financial crisis. In view of the central role that manufacturing industry played in China's rise as a global economic power, the authors are particularly interested in whether or not manufacturing is a special case. Design/methodology/approach – The paper undertakes a comparative study of leverage differences between manufacturing and non-manufacturing industry firms on both a cross-section and time-series basis. This is supplemented by a pooled regression analysis that models the factors determining leverage on an industry-by-industry basis. Findings – The authors find that leverage levels differ across industries because of industry-based differences in financial characteristics. It is also found that, despite playing a leading role in China's economic development, there is no evidence to suggest that manufacturing is a special case. Across all sectors borrowing-power-related variables were identified as being important determinants of leverage and, contrary to the expectations, factors relating to profitability were largely insignificant. Research limitations/implications – The trade off and pecking order capital structure theories found to be commonly applicable to firms in the western business environment do not appear to adequately explain capital structure in China. Originality/value – The paper identify evidence to suggest that China needs to be treated as a “special case” in the context of capital structure theory due to the unique cultural and business environment.
    Original languageEnglish
    Pages (from-to)469-486
    JournalManagerial Finance
    Issue number5
    Publication statusPublished - 2014

    Bibliographical note

    The full text of this item is not available from the repository.
    This article is (c) Emerald Group Publishing 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.


    • capital structure
    • manufacturing industry
    • corporate finances
    • financing
    • Chinese listed companies
    • cultural factors


    Dive into the research topics of 'The capital structure of Chinese listed firms: is manufacturing industry special?'. Together they form a unique fingerprint.

    Cite this