The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms

Article

Boateng, A., Cai, H., Borgia, D., Gang Bi, X. and Ngwu, F. 2017. The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms. Review of Accounting and Finance. 16 (4), pp. 444-461. https://doi.org/10.1108/raf-12-2015-0193
TypeArticle
TitleThe influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms
AuthorsBoateng, A., Cai, H., Borgia, D., Gang Bi, X. and Ngwu, F.
Abstract

Purpose: This paper examines the effects of internal corporate governance mechanisms on the capital structure decisions of Chinese listed firms.
Design/Methodology: Using a large and more recent dataset consisting of 2386 Chinese listed firms over the period from 1998 to 2012, we employ panel data and use different statistical methods (OLS, fixed effects, and system GMM) to analyse the effects of firm-specific and corporate governance influences on capital structure.
Findings: We find that the proportion of independent directors and ownership concentration exert significant influence on the level of Chinese long-term debt ratios after controlling for firm-specific determinants and split share reforms. Further analysis separating our sample into state-owned enterprises (SOEs) and privately- owned enterprises (POEs) suggests that ownership concentration in the hands of the state leads to decrease in debt ratios.
Implications: The finding implies that concentrated ownership in the hands of the state appears more efficient compared to their private counterparts in their monitoring role.
Original Value: This study extends prior literature, which has concentrated disproportionately on firm-specific influences on capital structure, to the effects of within-firm governance mechanisms on capital structure decisions. The paper contributes to the agency theory-capital structure discourse in an emerging country context where corporate governance system appears weak.

PublisherEmerald
JournalReview of Accounting and Finance
ISSN1475-7702
Publication dates
Online29 Sep 2017
Print13 Nov 2017
Publication process dates
Deposited20 Jul 2017
Accepted19 Jun 2017
Output statusPublished
Accepted author manuscript
Accepted author manuscript
Copyright Statement

This is the accepted version of the manuscript "The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms", published in the journal "Review of Accounting and Finance" available via the journal site at: https://doi.org/10.1108/raf-12-2015-0193. This article is © Emerald Publishing Limited 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.

Digital Object Identifier (DOI)https://doi.org/10.1108/raf-12-2015-0193
LanguageEnglish
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