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

C-B. Tse, Timothy Rodgers

    Research output: Contribution to journalArticle

    4 Citations (Scopus)

    Abstract

    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
    Volume40
    Issue number5
    DOIs
    Publication statusPublished - 2014

    Fingerprint

    Capital structure
    Manufacturing industries
    Industry
    Leverage
    China
    Manufacturing
    Business environment
    Factors
    Design methodology
    Trade-offs
    Financial crisis
    Economic power
    Borrowing
    Regression analysis
    Profitability
    Cross section
    Economic development
    Shanghai
    Comparative study

    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: https://curve.coventry.ac.uk/open/items/46cf6815-9129-4e51-96cb-cb69b2ff86ee/1/. 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.

    Keywords

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

    Cite this

    The capital structure of Chinese listed firms: is manufacturing industry special? / Tse, C-B.; Rodgers, Timothy.

    In: Managerial Finance, Vol. 40, No. 5, 2014, p. 469-486.

    Research output: Contribution to journalArticle

    Tse, C-B. ; Rodgers, Timothy. / The capital structure of Chinese listed firms: is manufacturing industry special?. In: Managerial Finance. 2014 ; Vol. 40, No. 5. pp. 469-486.
    @article{0cbaf83cc6ae4d2b8735e2f83fc81256,
    title = "The capital structure of Chinese listed firms: is manufacturing industry special?",
    abstract = "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.",
    keywords = "capital structure, manufacturing industry, corporate finances, financing, Chinese listed companies, cultural factors",
    author = "C-B. Tse and Timothy Rodgers",
    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: https://curve.coventry.ac.uk/open/items/46cf6815-9129-4e51-96cb-cb69b2ff86ee/1/. 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.",
    year = "2014",
    doi = "10.1108/MF-08-2013-0211",
    language = "English",
    volume = "40",
    pages = "469--486",
    journal = "Managerial Finance",
    issn = "0307-4358",
    publisher = "Emerald",
    number = "5",

    }

    TY - JOUR

    T1 - The capital structure of Chinese listed firms: is manufacturing industry special?

    AU - Tse, C-B.

    AU - Rodgers, Timothy

    N1 - 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: https://curve.coventry.ac.uk/open/items/46cf6815-9129-4e51-96cb-cb69b2ff86ee/1/. 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.

    PY - 2014

    Y1 - 2014

    N2 - 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.

    AB - 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.

    KW - capital structure

    KW - manufacturing industry

    KW - corporate finances

    KW - financing

    KW - Chinese listed companies

    KW - cultural factors

    U2 - 10.1108/MF-08-2013-0211

    DO - 10.1108/MF-08-2013-0211

    M3 - Article

    VL - 40

    SP - 469

    EP - 486

    JO - Managerial Finance

    JF - Managerial Finance

    SN - 0307-4358

    IS - 5

    ER -