Determinants of Chinese equity financing behaviours: traditional model and the alternatives. (26th June 2015)

• Record Type: Journal Article
• Authors: Chen, Xiaoyan; Ling, Xin
• Is Part Of: Accounting and finance. Volume 57:(2017)Supplement 1
• Page Start: 69
• Page End: 100
• Publication Date: 2015-06-26
• Subjects: Capital structure -- China -- Corporate governance -- SEO -- Spurious correlation; Accounting -- Periodicals; Finance -- Periodicals; 657.05
• DOI: 10.1111/acfi.12151
• Languages: English
• ISSNs: 0810-5391

Abstract

Abstract: This paper studies the capital structure of Chinese SEO issuers, from the perspective of equity. The traditional model is subject to several problems including spurious correlation, cumulative measure and endogeneity. System GMM (generalised method of moments) is superior to the traditional model. Corporate governance is positively correlated to firm equity level; however, it does not affect incremental managerial adjustments to equity. In addition, state control positively influences equity level but has a negative effect on incremental managerial adjustment. Mixed evidence is found for the established capital structure theories in the Chinese context.