您现在的位置:首页 > >

Capital Structure Choice in a Nascent Market Evidence from Listed Firms in China


Capital Structure Choice in a Nascent Market: Evidence from Listed Firms in China
Harjeet S. Bhabra, Tong Liu, and Dogan Tirtiroglu?
We study the capital structure decisions of listed firms in China between 1992 and 2001. The Chinese market exhibits high information asymmetry, phenomenal growth, highly concentrated ownership, and a lack of external market for corporate control. We find that Chinese firms use little long-term debt, which is positively (negatively) related to firm size and tangibility (profitability and growth options). These results are robust to the degree of seasoning after the initial public offering and private versus State ownership. Although industry membership is important, the development and growth of the stock market did not affect the long-term debt ratios over the years.

Recent research on capital structure choice shows that there are many similarities in the underlying factors that influence firms’ debt-to-equity choice, both in the developed (Rajan and Zingales, 1995; Wald, 1999) and emerging countries (Demirguc-Kunt and Maksimovic, 1999; Booth, Aivazian, Demirguc-Kunt, and Maksimovic, 2001). These results are striking, given that there is considerable variation across markets in terms of their legal and institutional frameworks, market capitalization, and the degree of market maturity. Although these studies collectively examine more than 30 countries, China is conspicuous by its absence. China is emerging as a major economic player on the global scene, transforming itself from a centrally planned economy to a more market-oriented one, in spite of its relatively short capital market history of nearly three decades. In contrast to China, stock markets in many emerging markets have a long history. For example, the stock exchange in India was established in 1875, in Malaysia in 1973, in Korea in 1956, in Thailand in 1974, and in Pakistan in 1949. In this paper we examine the determinants of capital structure choice for listed Chinese firms. To do so, we ask the following questions: 1. How does the maturity structure of debt for listed Chinese firms compare to that in developed and emerging countries? 2. How does the concentrated and nontradable (diffused and tradable) ownership by the State and legal-person shareholders (domestic individual investors) influence the listed Chinese firms’ long-term debt ratios, respectively?
We thank the editor, two anonymous referees, Sheridan Titman, Alex Triantis, and seminar participants at Concordia University, University of Connecticut, Copenhagen Business School, University of Melbourne, Post-Keynesian Study Group, and the Financial Management Association 2002 Meetings for many helpful suggestions. We thank Wei Shao, Yuzhi Wang, and Yong Chen for their excellent research assistance, especially for their help in manually collecting data from Chinese documents. Any remaining errors are our own.
?

Harjeet S. Bhabra is an Associate Professor of Finance at Concordia University in Montreal, Canada. Dogan Tirtiroglu is a Professor of Finance at Concordia University in Montreal, Canada. Tong Liu is a Senior Business Operations Analyst at Washington Mutual in Arlington, TX. Financial Management ? Summer 2008 ? pages 341 - 364

342

Financial Management

?

Summer 2008

3. Is there a relation between the rapidly growing stock market activity and the use of long-term debt capital by Chinese firms? 4. In a nascent market with presumably high levels of information asymmetry and one with a considerable presence of the State in financial intermediation, how relevant are the determinants of capital structure choice that have been identified for firms in the developing and mature financial markets? 5. Does the capital structure choice differ between listed firms with State ownership and listed entrepreneurial private firms with no State ownership? We adopt an approach similar to that of Demirguc-Kunt and Maksimovic (1999) and Booth et al. (2001), but we add several distinctly different contributions. First, our data make it possible for us to directly test the monitoring role of various categories of ownership structures, with different monitoring abilities and legal rights, on sample firms’ long-term debt ratios in an environment without a significant external corporate control market. 1 Second, whether including medium- and small-size firms in both papers’ samples might affect their conclusions remains an open question. Both papers, especially Booth et al., use a maximum of (at best) 100 largest firms of emerging countries in their sample. We avoid this question, since we have access to almost all listed Chinese firms (large, medium, and small) for our sample period. Third, since we are studying only one country, the legal, institutional, and financial environment remains constant in our analysis (Smith and Warner, 1979). Our results show that Chinese firms use very little long-term debt, rendering China’s debt level the lowest among all the countries studied to date and that the development and growth of the stock market did not provide enough impetus for the long-term debt market to grow. Our results for the impact of firm-specific factors, such as firm size, tangibility, profitability, and growth options, are largely consistent with findings for the developed and emerging economies. We also find that the State’s, legal-person shareholders’ (i.e., institutions), and foreign investors’ ownership positions exert significant linear and nonlinear effects on sample firms’ capital structure choices. Further, ownership effects differ between the entrepreneurial private firms (EPFs) and the State-owned enterprises (SOEs). Our findings also show that the largest sample firms drive, to some extent, the overall results. The paper is organized as follows. In Section I we develop the testable hypotheses and describe the variables and our research method. Section II describes the data. We present and discuss our empirical results in Section III. Section IV concludes the paper.

I. Testable Hypotheses, Variable De?nitions, and Research Method
We draw on theories of capital structure and the unique features of the institutional environment, and share ownership structure in China to formulate our hypotheses. 2 In general, these models show that higher information asymmetry and agency costs are associated with low debt ratios.
1

Allen, Qian, and Qian (2005) document that the external governance mechanisms in China are weak, given the nature of ownership structure of listed firms. They argue that the existence of cross-holding of shares among listed companies and institutions make hostile takeovers almost impossible. Commonly cited theories include: 1) interest tax shields (Modigliani and Miller, 1963; Berens and Cuny, 1995), 2) financial distress and bankruptcy costs (Scott, 1977; Haugen and Senbet, 1988), 3) availability of nondebt tax shields (DeAngelo and Masulis, 1980), 4) signaling (Flannery, 1986; Kale and Noe, 1990; Diamond 1991, 1993; Shah, 1994), 5) agency costs of debt and equity (Jensen and Meckling, 1976; Myers, 1977; Smith and Warner, 1979), and 6) the availability of investment opportunities (Myers, 1977; Hart and Moore, 1990; Stulz, 1990; Smith and Watts, 1992; Berger, Ofek, and Yermack, 1997). Excellent surveys of the literature on capital structure can be found in Bradley, Jarrell, and Kim (1984) and Harris and Raviv (1991).

2

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

343

Empirical evidence shows that ownership concentration, firm size, tangibility of assets (also called asset specificity), profitability, and growth options, as well as industry classification, are important determinants of capital structure choice. 3 We limit ourselves to identifying the important determinants of capital structure without necessarily confirming or disputing one theory or the other (Shyam-Sunder and Myers, 1999; Booth et al., 2001).

A. Short-Term versus Long-Term Debt Financing Current research suggests that informed debt capital, characterized mainly by bank lending, is short term 4 whereas uninformed debt capital, characterized mainly by lending by pension funds and insurance companies, tends to be long term and publicly funded. 5 In the United States, the long-term public debt market was 207.3% of the GDP at the end of 2002, and primarily owned by uninformed investors. Kim, Ho, and Giles (2003) report that at the end of 2002, banks held 86% of all loans in China and that the public corporate debt amounted to only 2.8% of all outstanding debt. 6 Furthermore, assets held by institutional investors amounted to only 10.6% of the GDP at the end of 2002. 7 Hence, informed investors are the dominant lenders, and the role of uninformed lenders in the Chinese capital markets has been limited. This situation is similar to that in economies in which banks dominate financial intermediation. Given this background and the difficulties of financial contracting under a relatively high level of asymmetric information of a nascent capital market, we hypothesize that listed Chinese firms will have less long-term debt than will firms in the developed capital markets. Next, we consider comparatively the debt ratios of SOEs and EPFs. Even after listings, the State continues to be the dominant equity holder in SOEs. It is obviously motivated to ensure that these firms remain economically viable and productive employers. Furthermore, the privatized SOEs are more likely to be the better performing subset of all SOEs. Thus, the presence of the State for the listed SOEs offers implicit loan guarantees for the lenders and lowers SOEs’ financial distress. On the other hand, EPFs lack the implicit loan guarantees, are younger than SOEs, exhibit high growth (Myers, 1977), and are disadvantaged in the amount of information available about them to the market participants. Therefore, we hypothesize that EPFs will have lower long-term debt ratios than will SOEs. Following Rajan and Zingales (1995), we use long-term debt and define two measures of leverage: 1) LTDBV , computed as long-term debt divided by total book value of assets, and 2) LTDMV , computed as long-term debt divided by total market value of assets. 8
3

See Titman and Wessels (1988), Smith and Watts (1992), Rajan and Zingales (1995), Demirguc-Kunt and Maksimovic (1999), Hull (1999), Wald (1999), de Miguel and Pindado (2001), Booth et al. (2001), and Bancel and Mittoo (2004). Demirguc-Kunt and Maksimovic (1999) show that (especially small) firms in emerging countries rely mostly on shortterm debt. They argue, following Diamond (1991, 1993) and Rajan (1992), that when the legal system is inefficient or costly to use, short-term debt is more likely to be employed than long-term debt. This behavior also seems consistent with the contracting cost hypothesis of and evidence in Barclay and Smith (1995). We thank an anonymous referee for bringing this point to our attention. Between 2000 and 2002, there were only 27 firms that raised a total of RMB 59.75 billion (US$7.2 billion) in new public debt issues (Kim, Ho, and Giles, 2003). See Appendix A for details of institutional investors in China. See Appendix B for a summary of the stock market developments in China.

4

5 6

7 8

The total market value of assets is the sum of book value of debt and the market value of equity, MVE, where MVE = Price Year?end ? (Total number of all outstanding shares minus total number of H_shares minus total number of B_shares). B_ and H_shares are held by foreigners and are priced in US$ and HK$, respectively, and data on these are not available. We exclude them when computing MVE. Since B_ and H_shares account for less than 5% of total shares outstanding, we do not expect their exclusion to affect significantly our results.

344

Financial Management

?

Summer 2008

B. Monitoring under a Unique Ownership Structure and Debt Financing Jensen and Meckling (1976) suggest that managerial ownership is a determinant of capital structure. Lack of data on managerial share ownership precludes us from directly testing the relation between managerial incentives and a firm’s financing decision. However, anecdotal evidence suggests that managers held only a very small number of shares during our sample period. The unique ownership structure in China suggests a relation between ownership structure and the long-term debt ratio. Common shares are classified into four categories: A_, B_, H_, and N_shares. They trade according to shareholders’ residency and nationality. The A_shares are by far the largest segment of the stock market and are sold only in the Chinese currency and only to domestic investors. These include the State, legal-person investors (i.e., institutional investors, including corporate, and nonfinancial firms), employees, and domestic individual investors. The B_shares are sold only to foreign investors and some large authorized domestic financial institutions. The H_shares are issued and traded on the Hong Kong Stock Exchange for all investors worldwide, except for those who hold a Chinese passport. The N_shares are listed on the NYSE. Because H_ and N_shares are a small minority, we do not include them in this study. Two distinct groups of ownership arise: 1) a diffused ownership of tradable shares held by individual investors (A_shares of domestic and B_shares of foreign investors) and 2) a concentrated ownership of nontradable A_shares held by both the State and the legal-person shareholders. The State owns most of the legal-person investors and continues to be the dominant shareholder even after privatization. Collectively, the State and legal-person shareholders owned an average of 65% of the total outstanding shares in nontradable domestic A_shares during our sample period (see Table III). This fact gives rise to two counter hypotheses. On the one hand, monitoring by large shareholders with concentrated ownership may substitute for the disciplinary role of debt (Grier and Zychowicz, 1994), which suggests a negative relation between the State’s and legal-person investors’ ownership and the long-term debt ratio. On the other hand, the direct and indirect presence of the State reduces the financial distress costs for our sample firms, which indicates a positive relation. Thus, the sign of the relation between the State and legal-person ownerships and the long-term debt ratio is an empirical issue. The remaining 35% of A_shares that were tradable were likely diffused among domestic individual shareholders. The low proportion of tradable A_shares is likely to negatively affect the degree of transparency in the market. Rozeff (1982) indicates that as the number of shareholders increases, there will be either a negative or insignificant relation between the number of shareholders and a firm’s long-term debt ratio. 9 Therefore, we hypothesize a negative or nonsignificant relation between domestic individual investors’ ownership of A_shares and the long-term debt ratio. Foreigners’ B_shares are also tradable and diffused. Furthermore, China was without a significant market for corporate control during our sample period (Allen, Qian, and Qian, 2005). Foreigners’ presence could also mean both openness to the ideas from the developed markets and increased transparency. Therefore, its effect should be positive or nonsignificant. Allen, Qian, and Qian (2005) note that reputation and private relationships between owners of private firms and their stakeholders, in particular creditors, play an important role in China. These nonformalized factors should provide binding incentives for managerial self-discipline and
9

The empirical evidence is mixed. While Aggarwal and Mandelker (1987) and Mehran (1992) find a positive relation for US firms, Friend and Hasbrouck (1988) and Jensen, Solberg, and Zorn (1992) report a negative relation. The results from Mohammed, Perry, and Rimbey (1998) for a sample of Malaysian firms indicate that both insider ownership and outsider ownership have a significant negative relation with a firm’s long-term debt ratio.

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

345

bonding. They substitute for high levels of asymmetric information, a lack of a significant market for corporate control, weak corporate governance mechanisms, and a lack of implicit loan guarantees by the State in the private sector, including EPFs. 10 The legal-person and domestic individual investors owned an average of almost 96% (58% and 38%, respectively) of the outstanding EPF shares (see Table III). It is not unlikely that EPFs are mainly family firms with a concentrated ownership in the A_shares. Given these nonformalized, but culturally strongly enforced factors, we hypothesize a positive or nonsignificant relation between these ownership positions and EPFs’ long-term debt ratios. In our empirical analysis, we define A_shares as the proportion of outstanding shares in Chinese currency held by Chinese investors, B_shares as the proportion of outstanding shares in foreign currency held by foreigners, the State shares as the proportion of outstanding A_shares held by the State, and the legal-person shares as the proportion of outstanding A_shares held by the legal-person shareholders.

C. Development of the Equity Market and Growth in the Public Debt Market Demirguc-Kunt and Maksimovic (1996) report evidence from some countries that the presence of an active stock market contributes to the development and growth of an active long-term public debt market. We examine whether their evidence applies to China by tracking, through time, the aggregate behavior of the long-term debt ratios. Che and Qian (1998) show that historically, in an environment of property rights that were not secure against State encroachment and in the absence of the rule of law to constrain the State, private enterprises contributed little to the total industrial output in China. The establishment of the stock exchanges in the early 1990s represented one of the first steps toward the development and implementation of the rule of law and in securing property rights for private enterprises. 11 On the one hand, this development has resulted in the burgeoning of the stock market. From only 54 listed firms on the two exchanges in 1992, there were 1,154 listed firms at the end of 2001—a 21-fold increase over a 10-year span. To date, most listed firms are privatized SOEs, who have exhibited improved postprivatization financial and operating performance (Wei, Varela, D’Souza, and Hassan, 2003; Jia, Sun, and Tong, 2005). However, the number of listed EPFs has increased significantly since the mid-1990s. On the other hand, the rapid growth of the stock market did not dissolve the State’s and legal-person shareholders’ dominant and nontradable ownership position. We hypothesize that the limited amount of equity available for trading impedes not only transparency in the market, but also the development and growth of a viable long-term public corporate debt market in China. 12
10 Debt ratio in the United States is influenced by the presence of an active corporate control market (Raad and Ryan, 1995). 11 There was no bankruptcy law in China until November 1, 1988 when the Enterprise Bankruptcy Law was introduced for an initial trial period. It was only on April 9, 1991 that the Civil Procedural Law, which established the bankruptcy procedure for corporations, was enacted. The bankruptcy of Guangdong International Trust and Investment Corporation (GITIC) in 1995 clearly showed the State’s resolve and commitment to allow SOEs to declare bankruptcy. GITIC, an arm of the provincial government of Guangdong province, was the first nonbanking financial institution to file for bankruptcy protection and was forced by the People’s Bank of China to close due to its inability to repay approximately $4 billion in debt obligations (see Asian Economic News, January 25, 1999). Cao (1998) reports that the number of bankruptcies increased from 117 to 6,227 between 1991 and 1996. Yet, this still represented only 0.6% of all registered enterprises in that year, which is below the international average of 1%. 12 In most countries, the development of debt markets preceded equity markets. The information revealed in equity markets is only useful for arms-length debt, such as public bond markets. We thank a referee for pointing this out.

346

Financial Management

?

Summer 2008

D. Determinants of Capital Structure We consider whether size, tangibility, profitability, growth, and industry membership are determinants of capital structure choice in China. Large firms tend to be more diversified and less prone to bankruptcy, have lower transaction costs, and be able to issue debt at a cheaper rate than can small firms (see Titman and Wessels, 1988, among others). In China, listed firms are large, on average, and SOEs are larger than the EPFs. In addition, SOEs enjoy the State’s implicit loan guarantees. Therefore, we hypothesize a positive relation between firm size and the long-term debt ratio. We measure firm size as the natural logarithm of annual sales revenues. There are two different views on how tangibility affects a firm’s debt ratio. On the one hand, in some studies tangible assets serve as collateral, secure the debt of a firm, and are a good proxy for the reduced agency costs that result from the conflict of interest between bondholders and shareholders (Mackie-Mason, 1990; Prowse, 1990; Jensen, Solberg, and Zorn, 1992; Smith and Watts, 1992; Booth et al., 2001). This view suggests a positive relation between tangibility and long-term debt financing. On the other hand, Berger and Udell (1994) show that firms that develop a close relationship with their creditors need to provide less collateral in obtaining debt financing, because a close relationship can substitute for physical collateral. Their argument indicates that tangibility has either a weakly positive or no influence on a firm’s debt ratio. This latter argument appears to apply to Chinese firms, since they usually have very good relationships with their banks. Moreover, the State’s presence has the potential to make the lenders demand less collateral. So, the relationship between tangibility and leverage remains an empirical issue. We follow Rajan and Zingales (1995) by defining tangibility as the ratio of fixed assets over total assets. Consistent with the pecking order hypothesis, we also hypothesize that profitability is negatively related to the proportion of long-term debt (see Myers, 1984; Myers and Majluf, 1984; Friend and Lang, 1988; Wald, 1999). We follow Titman and Wessels (1988) by defining profitability as the ratio of operating income before depreciation over total assets. The role of growth options in capital structure debate has received a lot of attention. However, the negative relation between growth and leverage that Myers (1977) conjectures may not apply in China. In our view, the presence of the State and legal-person shareholders in China plays a role similar to that played by a keiretsu in Japan. 13 Thus, the relation between growth opportunities and leverage remains an empirical issue. EPFs are younger and exhibit considerably higher growth than do SOEs. Although the State does not have any direct ownership in EPFs, the legal-person shareholders own a substantial percentage of the outstanding stocks of EPFs. These shareholders can and do exercise corporate control directly as members of the board of directors (Xu and Wang, 1997). Thus, our keirutsu analogy applies also to EPFs. If the dominant relation between growth and long-term debt ratio is negative (positive) for the total sample, we expect this relation to hold for the EPF subsample as well. We measure growth options by Tobin’s q. It is the ratio of the sum of the market value of equity, current liabilities net of current assets, and the book value of long-term debt to the book value of the sample firms’ total assets. 14
13 See Wald (1999). Also, Gupta (1969) proposes a positive relation between growth and long-term debt financing. He argues that since growth could enhance a firm’s future borrowing capacity, growing firms would tend to finance expansion with debt. Empirical evidence from emerging economies in Booth et al. (2001) is mixed. 14

This measure is a good proxy for the theoretical Tobin’s q (Chung and Pruitt, 1994).

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

347

Evidence shows that firms in asset-intensive industries use more long-term debt than do firms with more intangible assets (Titman and Wessels, 1988). 15 According to Xu and Wang (1997), industry classification had a significant effect on the financial performance of the listed Chinese firms. Therefore, we hypothesize that firms in more asset-intensive industries will have more debt than will firms in other industries in China. Using dummy variables, we test if the leverage ratios are significantly different across seven industries: manufacturing, utility, retail/services/trade, mining/resources, real estate, and conglomerate. We exclude financial firms because the amount of their debt is not strictly comparable to the amount of the debt issued by nonfinancial firms. E. Research Method The dependent variable is bounded on the lower end by zero. Therefore, we use a Tobit estimation procedure to assess the effect of ownership structure, firm size, tangibility, profitability, growth opportunities, and industry classification on leverage. The Tobit regression specifies the relation between long-term debt ratio and the explanatory variables as follows: yi,t = α + xi,t β + ei,t =0 otherwise, if yi,t > 0 (1)

where y i,t is the long-term debt ratio, either LTDBV or LTDMV , for firm i at time t; x i,t is the vector of explanatory variables, comprising industry membership dummies, firm characteristics, and ownership characteristics for firm i at time t; β is the vector of parameters to be estimated; and e i,t is the independently and identically distributed error term with mean zero for firm i at time t.

II. Data and Descriptive Statistics
Our data come from the Annual Reports of Listed Companies in China and the Statistics Year Book, issued by the Shanghai and Shenzhen Stock Exchanges; from the China Listed Companies Reports, issued by China Cheng Xin Securities Rating Co. Ltd.; and from the China Securities Regulatory Commission and the People’s Bank of China. We obtain annual data from the balance sheets, income statements, and the sources and uses of funds statements for all listed firms for each year between 1992 and 2001. Table I classifies by year and industry the sample firms that were listed on either the Shanghai or the Shenzhen Stock Exchanges in each year between 1992 and 2001. The number of firms grew from 54 at the end of 1992 to 1,154 by the end of 2001. Most of this increase occurred in the manufacturing sector (65%), followed by retail/services/trade (17%). The 1994 stock market drop of nearly 20% prompted the cancellation of several planned privatizations for 1995. Nevertheless, except for 1995, the number of newly listed firms in each year was large. At the end of 2005, there were 1,380 listed firms, 834 and 446 on the Shanghai and Shenzhen Stock Exchanges, respectively. A. Leverage Ratios of Listed Firms Panel A of Table II shows the means and medians of alternative measures of long-term debt, and total liabilities for the SOEs and EPFs, respectively. The table also reports statistics for the
15 Mohamad (1995) shows a significant interindustry difference in capital structure among large Malaysian companies between 1986 and 1990. Allen and Mizuno (1989) also document an industry effect for Japanese firms.

348

Financial Management

?

Summer 2008

Table I. Distribution of Listed Chinese Firms in the Final Sample by Year and Industry
This table provides the distribution of firms, by year and by industry, that were listed for the first time on either the Shenzen Stock Exchange or the Shanghai Stock Exchange between 1992 and 2001. We mainly obtain our data from the Annual Reports of Listed Companies in China and Statistics Year Book issued by the two exchanges, and the China Listed Companies Reports issued by China Cheng Xin Securities Rating Company Ltd. We use all nonfinancial public companies listed on the two stock exchanges in the final sample. Year Manufacturing Retail/ Mining/ Utility Real Conglomerate Total % of the Services/ Resources Estate Total Trade Sample 6 24 26 6 44 35 9 16 23 6 195 17.46% 0 2 1 0 7 8 7 5 11 4 45 4.03% 0 5 8 11 7 6 0 1 9 6 9 1 4 0 2 1 6 0 4 4 49 35 4.39% 3.13% 6 8 11 5 20 9 6 5 3 0 73 6.54% 39 3.49% 123 11.01% 107 9.58% 24 2.15% 204 18.26% 206 18.44% 107 9.58% 98 8.77% 137 12.26% 72 6.45% 1,117 100.00% 100.00%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Total % of the total sample

22 70 56 12 118 144 81 69 94 54 720 64.46%

differences in the means and medians between the two samples. TLBV and TLMV are measures of the proportion of total liabilities in book value and market value terms. Both are nonequity liabilities, as in Rajan and Zingales (1995). We note that total liabilities include long-term debt and current liabilities. Since our data do not allow us to identify short-term debt and accounts payables, we use proportion of current liabilities as proxy for short-term debt. The mean and median values of LTDBV , LTDMV , TLBV , and TLMV are all significantly greater for SOEs than are those for EPFs. The mean (median) value of LTDBV for SOEs is 6.4% (3.2%) and 4.4% (1.9%) for EPFs. The corresponding values for LTDMV are much lower. These results indicate that the Chinese firms use little long-term debt. This finding contrasts sharply with the evidence for other emerging countries (Demirguc-Kunt and Maksimovic, 1999; Booth et al., 2001). In fact, the use of long-term debt by publicly traded Chinese firms is the lowest among all the countries studied to date. The mean (median) value of TLBV for SOEs is 42.7% (42.3%) and 32.7% (32.8%) for EPFs. The corresponding values are again substantially lower for TLMV for both subsamples. In relation to other emerging economies, the average total liabilities of Chinese firms fall somewhere in the middle of the total debt of firms in these countries (Booth et al., 2001). The high proportion of short-term liabilities by the listed Chinese firms is consistent with the contracting-cost arguments in Barclay and Smith (1995), the prediction in Diamond (1991, 1993) and Rajan (1992) that firms are more likely to use short-term debt to minimize borrowers’ opportunistic behavior in countries with inefficient or costly to use legal systems, and the findings from other emerging markets (Booth et al., 2001). Panel B shows the distribution of long-term debt and total liability measures by industry. The utility industry has the highest level of long-term debt. The real estate industry shows some

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

349

Table II. Leverage Ratios for State-Owned Enterprises (SOEs) and Entrepreneurial Private Firms (EPFs) in China
This table presents the mean and median leverage ratios for both SOEs and EPFs. We compute the ratios by using pooled cross-sectional and times-series data for all publicly listed Chinese firms between 1992 and 2001. We define leverage variables as follows: LTDBV is long-term debt scaled by the book value of total assets; LTDMV is long-term debt scaled by the market value of total assets; TLBV is total liabilities scaled by the book value of total assets; TLMV is total liabilities scaled by the market value of total assets. To compute the market value of total assets, the market value of equity, MVE, is defined as MVE = Price (year-end) ? (Total number of all outstanding shares minus total number of outstanding H_shares minus total number of outstanding B_shares). The table reports p-values for the tests of differences in the means (t-test) and medians (Wilcoxon signed-rank test) between the two samples. Panel A. Leverage Ratios for SOEs and EPFs Variable SOEs N = 5,042 Mean 0.0643 0.0293 0.4267 0.1817 Median 0.0321 0.0116 0.4228 0.1549 EPFs N = 181 Mean 0.0437 0.0165 0.3271 0.1211 Median 0.0189 0.0045 0.3283 0.1058 t-Statistic and p-Value for Difference in Means 4.55 <0.0001 6.65 <0.0001 8.40 <0.0001 9.22 <0.0001 z-Statistic and p-Value for Difference in Medians 3.47 0.0005 4.06 <0.0001 7.39 <0.0001 7.04 <0.0001

LTDBV LTDMV TLBV TLMV

Panel B. Leverage Ratios by Industry Variable All Firms Manufacturing Retail/ Mining/ Utilities Real Conglomerate (N = 5,359) (N = 3,364) Services/ Resources (N = 219) Estate (N = 411) Trade (N = 171) (N = 228) (N = 958) 0.0637 0.0629 0.0671 0.0506 0.1127 0.0465 0.0504 (0.0851) (0.0809) (0.0979) (0.0725) (0.1174) (0.0682) (0.0671) 0.0289 0.0289 0.0308 0.0192 0.0520 0.0208 0.0200 (0.0469) (0.0444) (0.0559) (0.0299) (0.0729) (0.0329) (0.0317) 0.4265 0.4264 0.4249 0.3574 0.3399 0.5237 0.4512 (0.1741) (0.1730) (0.1710) (0.1653) (0.1646) (0.1532) (0.1771) 0.1817 0.1840 0.1831 0.1372 0.1430 0.2307 0.1721 (0.1235) (0.1265) (0.1195) (0.0964) (0.1113) (0.1285) (0.1090)

LTDBV LTDMV TLBV TLMV

of the lowest averages. In general, this evidence is consistent with prior findings that firms in asset-intensive industries, such as utility and manufacturing, use more long-term debt than firms in other industries. Figure 1 shows the change in mean long-term debt and total liability ratios over the years. The number of firms used to compute the ratios varies for years 0 to 9 after listing, since firms that were listed in 1992 can be tracked for nine years, but firms that were listed in 2001 cannot be tracked after listing. Year 0 is the year in which a firm is listed on one of the two stock exchanges. The nearly flat plot for LTDBV and the slight upward slope for TLBV suggest that any new debt raised by the newly listed firms is of a short term. The ratios LTDMV and TLMV increase initially but then fall back close to their original values. In unreported results, we find that firms in the largest quartiles based on total assets, have more long-term debt than do firms in lower quartiles. Thus, we show that excluding small firms may miss important dynamics in leverage choices. A firm size effect clearly exists.

350

Financial Management

?

Summer 2008

Figure 1. Mean Leverage Ratios for Sample Firms after Listing
This figure tracks the long-term debt and total liabilities ratios over the years after the sample firms were listed. We note that the number of firms we use to compute the ratios varies for years 0 to 9 after listing, since we could track firms that were listed in 1992 for nine years, but we could not track firms that were listed in 2001 after listing. Year 0 is the year the firms were listed on one of the two exchanges. The LTDBV is long-term debt scaled by the book value of total assets; LTDMV is long-term debt scaled by the market value of total assets; TLBV is total liabilities scaled by the book value of total assets; TLMV is total liabilities scaled by the market value of total assets. To compute the market value of total assets, the market value of equity, MVE, is defined as MVE = Price (year?end) ? (Total number of all outstanding shares minus total number of outstanding H_shares minus total number of outstanding B_shares).
60% Leverage Ratios 50% 40% 30% 20% 10% 0% 0 2 4 6 8 10 Years after Listing

LTDBV TLBV LTDMV TLMV

B. Ownership and Firm Characteristics Table III provides descriptive statistics on ownership and firm-specific attributes. Panel A shows the distribution of ownership patterns. Domestic individual investors, legal-person investors, and employees (foreigners) have higher (lower) ownership in EPFs than in SOEs. At 39%, the mean proportion of liquid (or tradable) shares for EPFs is significantly larger than that of 35.5% for SOEs. SOEs have a higher percentage of nonliquid (or nontradable) shares than do EPFs. With the exception of utilities, the distribution of percentage of liquid shares across industries exhibits some level of homogeneity. On average, across all industries, about 65% of the shares do not trade. In Table III, Panel B shows that the average SOE (measured by total assets and sales) is significantly larger than the average EPF. The most asset-intensive industries are utility, manufacturing, and real estate. However, measured in US dollars, the average listed firm in China is smaller than the average firms in the G7 countries and most emerging markets. The tangibility ratio varies from a low of 13.4% for the real estate industry to a high of 53% for the utility industry. However, this ratio for SOEs is not significantly different from that for EPFs. The mean of Tobin’s q for EPFs is significantly higher than that for SOEs. Similarly, EPFs are significantly more profitable (18.11%) than are SOEs (8.31%). Profitability also varies across industries. Utilities are the most profitable, followed by the mining/resources industry. In summary, EPFs were smaller, more profitable, and had larger growth opportunities compared to SOEs during our study period. C. Evidence on the Development of Long-Term Debt Market Before financial liberalization, the State or State-controlled financial institutions provided most (if not all) of the financing for SOEs. This pattern continues even today. Neither an independent

Bhabra, Liu, & Tirtiroglu

Table III. Descriptive Statistics on Ownership and Firm Characteristics for Publicly Listed Chinese Firms

?

We compute descriptive statistics by using a pooled cross-sectional and time-series sample from 1992 to 2001. Panel A is a summary of the descriptive statistics on ownership characteristics. A_shares are denominated in the Chinese Yuan (Renminbi) and are held by individuals, the State, legal-person shareholders, and employees. B_shares are denominated in US$ and trade on the NYSE. Liquid shares that trade regularly comprise A_shares held by individuals and B_shares. Nonliquid shares that do not trade are A_shares held by the State, legal-person shareholders, and employees. We calculate the mean value reported for each category of shareholder as the percentage of the total number of shares outstanding. Panel B displays the descriptive statistics on firm characteristics. We define the variables as follows: tangibility denotes fixed assets/total assets; we measure firm size by sales and total assets (both in the local currency, Renminbi, or Chinese Yuan, and US$); Tobin’s q and the ratio of market-to-book value of equity are our proxies for growth options (we compute q as the market value of equity plus book value of debt divided by book value of assets); and profitability denotes operating income/total assets. The average exchange rate between the Chinese Yuan and US$ over the sample period is used to compute figures in US$. The table also reports t-statistics and p-values for the difference in means between the State-owned enterprises and the entrepreneurial private firms. Standard deviations appear in parentheses. Panel A. Ownership Structure (%) EPFs (189) t-Stat. & p-Value for Mean Manuf. (N = 3,573) Retail/Serv/ Trade (N = 1,099) Mining/ Resources (N = 177) Real Estate (N = 245) Utility (N = 265) Conglo. (N = 464)

Variable

All Firms (5,835)

SOEs (5,473)

A_Shares Individuals

Capital Structure Choice in a Nascent Market

State

Legal-person

Employee

B_Shares

Liquid shares

Nonliquid shares

31.95 (13.10) 30.59 (26.84) 31.54 (26.69) 1.74 (5.16) 3.66 (10.20) 35.61 (11.56) 63.87 (11.71)

31.69 (12.98) 31.97 (26.79) 30.41 (26.64) 1.67 (4.98) 3.78 (10.33) 35.47 (11.43) 64.05 (11.49)

38.48 (12.74) 0.00 (0.00) 56.69 (14.61) 2.56 (5.95) 0.54 (4.34) 39.02 (12.80) 59.26 (14.81)

7.07 <0.0001 88.26 <0.0001 23.42 <0.0001 2.03 0.0441 9.38 <0.0001 3.76 <0.0002 4.41 <0.0001

31.28 (12.62) 32.69 (27.67) 29.48 (27.27) 1.71 (4.91) 4.40 (11.13) 35.68 (11.06) 63.89 (11.25)

33.61 (13.48) 29.68 (23.28) 31.12 (24.30) 1.82 (5.57) 3.08 (9.55) 36.69 (11.63) 62.62 (11.67)

33.99 (11.31) 28.28 (28.37) 35.27 (26.96) 1.49 (4.11) 0.75 (4.98) 34.75 (10.34) 65.04 (10.35)

31.37 (14.96) 31.56 (29.01) 31.75 (26.08) 0.77 (3.32) 4.16 (8.94) 35.53 (12.11) 64.07 (12.02)

26.54 (12.07) 33.72 (26.71) 33.93 (25.45) 1.03 (3.04) 4.10 (10.75) 30.64 (11.72) 68.69 (11.53)

35.91 (14.37) 14.95 (20.64) 45.56 (24.14) 2.85 (7.48) 0.00 (0.00) 35.91 (14.37) 63.36 (14.69)

351

352

Table III. Descriptive Statistics on Ownership and Firm Characteristics for Publicly Listed Chinese Firms (Continued)
Panel B. Firm Characteristics

Variable

All SOEs EPFs t-Stat. & Manuf. Retail/Serv/ Mining/ Real Utility Conglo. Firms (N = 5,476) (N = 188) p-Value (N = 3,574) Trade Resources Estate (N = 265) (N = 461) (N = 5,834) for Mean (N = 1,097) (N = 177) (N = 249)

Tangibility (%)

Firm size (sales) (in Renminbi mil.) (in US$ mil.)

Firm size (T. assets) (in Renminbi mil.) (in US$ mil.)

Growth options Tobin’s q M/B of equity

Financial Management

Profitability (%)

34.15 (18.04) 87.63 (426.35) 10.07 (49.01) 159.48 (543.26) 18.33 (62.44) 2.97 (1.41) 4.60 (2.70) 8.23 (23.71)

34.32 (18.14) 90.28 (439.68) 10.87 (52.97) 162.92 (559.53) 19.63 (67.41) 2.96 (1.40) 4.59 (2.70) 8.31 (22.72)

34.97 (14.81) 43.08 (36.92) 5.19 (4.45) 107.43 (89.78) 12.94 (10.82) 3.31 (1.46) 4.66 (2.51) 18.11 (19.42)

0.58 0.5651 7.24 <0.0001 – – 5.37 <0.0001 – – 3.30 0.0009 0.37 0.7152 6.77 <0.0001

33.81 (15.82) 102.49 (537.18) 12.35 (64.72) 169.53 (663.88) 20.43 (79.98) 2.95 (1.40) 4.55 (2.67) 7.24 (21.52)

38.87 (20.12) 80.74 (131.79) 9.73 (15.88) 134.90 (229.82) 16.25 (27.69) 2.89 (1.36) 4.42 (2.49) 8.45 (24.04)

35.81 (16.70) 82.64 (118.50) 9.96 (14.28) 146.27 (153.49) 17.62 (18.49) 3.10 (1.18) 4.41 (2.07) 12.96 (19.82)

13.42 (15.74) 40.56 (38.65) 4.89 (4.66) 176.59 (166.94) 21.28 (20.11) 2.81 (1.29) 5.14 (3.15) 8.96 (36.27)

52.98 (17.62) 56.26 (73.17) 6.78 (8.82) 208.87 (226.54) 25.17 (27.29) 2.96 (1.36) 4.29 (2.51) 20.93 (23.76)

26.68 (17.05) 31.87 (35.07) 3.84 (4.23) 94.68 (84.09) 11.41 (10.13) 3.31 (1.64) 5.42 (3.29) 5.78 (28.70)

?

Summer 2008

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

353

credit evaluation system nor a private market for financial intermediation has developed in China. We investigate whether firms’ long-term debt ratios increase with an increase in the stock market size and trading activity during our sample period (Demirguc-Kunt and Maksimovic, 1996). 16 Given the recent financial contagion problems in the Far East, the development of the long-term credit market in China is an important issue not only for this market, but also for those surrounding it. The results in Table I, Table II, and Figure 1 demonstrate the rapid growth of the two stock exchanges and the substantial increase both in the stock market size and the number of listed firms. They also show that trading activity since the early 1990s did not affect the low levels of annual long-term debt ratios during our study period. These results differ from those in DemirgucKunt and Maksimovic (1996) for other countries and may suggest, following Demirguc-Kunt and Maksimovic (1999, p. 303), that “ . . . the additional liquidity that stock markets provide makes it easier for informed shareholders to escape the consequences of failed gambles, and therefore encourages risk-taking behavior costly to shareholders.” Alternatively, information revealed through the trading of tradable issues might have been only marginal in the Chinese context, because the State and legal-person investors maintain a large and nontradable ownership position in these firms. Thus, the prices quoted do not necessarily make the listed firms less risky. The State’s nontradable ownership acts as a major impediment for transparency and the development of any takeover market in the near future.

III. Empirical Results
Table IV presents the results of the Tobit regressions on the full sample. Table V contains empirical results for the SOE and EPF subsamples by the number of years since their initial public offerings. We present the results with LTDMV as the dependent variable in all regressions. The results with LTDBV are qualitatively similar and are available from the authors on request. A. Full Sample In Table IV, Models 1 through 3 report separately the effects of variables of ownership, firmspecific factors, and industry, respectively, while Model 4 presents the results with all variables. In Model 1, tangibility and firm size are positively related to the long-term debt ratio, while profitability and growth options are negatively related. These results are consistent with prior research. 17 Collateral, rather than reputation and/or close relationships between borrowers and
16 A properly functioning stock market provides reliable, relevant, and timely information; brings transparency; and reduces information asymmetry that exists between the firms and their investors (Grossman, 1976; Grossman and Stiglitz, 1980). 17 We thank a referee who pointed out that if the companies are so profitable but they cannot repurchase shares and do not pay out large dividends, then the debt ratio will naturally decline or at least be low. Listed firms were prohibited by the Company Law from repurchasing their own shares during our sample period unless it was for the express purpose of reducing capital, or the repurchase was related to a merger (Gang and Wong, 1998). This might have contributed to the low long-term debt ratios. The Chinese regulators proposed new legislations in June 2005, which included, among other things, a share repurchase program mainly to defend themselves against hostile takeover attempts (see Norton Rose Newsletter, June 2005-September 2005). With respect to dividend payments, Lee and Xiao (2004) report that of the total 3,040 firm-year observations between 1996 and 1999, 2,785 were profitable, of which 1,131 paid dividends. The authors also report a mean after-tax dividend per share and dividend yield (payout ratio) of 0.14 Yuan and 0.61% (60.17%), respectively, for their sample of 2,397 firm-year observations. It, therefore, appears that the influence of dividend payments on the listed firms’ debt ratios is less of a concern than the lack of a stock repurchase provision during our sample period.

354

Financial Management

?

Summer 2008

Table IV. Results for Tobit Regressions for Publicly Listed Chinese Firms
This table reports the results of Tobit regressions, using pooled cross-sectional and time-series data. The dependent variable is long-term debt scaled by market value of total assets (LTDMV ). We define the independent variables as follows: tangibility denotes property, plant, and equipment divided by total assets; profitability denotes operating income divided by total assets; we measure growth by Tobin’s q; firm size denotes log (total assets); A_Shares denotes the proportion of outstanding shares in Chinese currency held by Chinese investors; B_Shares denotes the proportion of outstanding shares in foreign currency held by foreigners; State shares denotes the proportion of outstanding shares held by the State; legal-person shares denotes the proportion of outstanding shares held by the legal-person shareholders. In addition, we include dummy variables for the following industries: manufacturing, retail/services/trade, mining and resources, real estate, utility, and conglomerate. The manufacturing industry is captured by the intercept. Proportion > 0 indicates the percentage of firms that had long-term debt in their capital structure. Standard errors appear in parentheses. Variable Intercept Tangibility Profitability Growth (Tobin’s q) Firm size A_Shares (local investors) B_Shares (foreigners) State shares Legal-person shares Retail/services/trade Mining and resources Real estate Utility Conglomerate Proportion > 0 Log-likelihood N
??? ??

Model 1 ?0.10152??? (0.0098) 0.0910??? (0.0036) ?0.0085??? (0.0030) ?0.0098??? (0.0005) 0.0111??? (0.0008)

Model 2 0.0310?? (0.0125)

Model 3 0.0238??? (0.0009)

Model 4 ?0.1118??? (0.0149) 0.0913??? (0.0038) ?0.0088??? (0.0030) ?0.0097??? (0.0005) 0.0108??? (0.0008) 0.0045 (0.0119) 0.0019 (0.0127) 0.0164 (0.0115) 0.0082 (0.0115) ?0.0009 (0.0017) ?0.0116??? (0.0037) 0.0041 (0.0034) 0.0065?? (0.0033) 0.0009?? (0.0004) 84.88% 6889.22 5,253

?0.0080 (0.0136) 0.0273?? (0.0143) 0.0026 (0.0131) ?0.0212? (0.0131) 0.0021 (0.0020) ?0.0126??? (0.0042) ?0.0108??? (0.0037) 0.0255??? (0.0037) ?0.0017??? (0.0005) 84.88% 6,872.17 5,253 84.58% 6,221.77 5,343 84.55% 6,212.15 5,359

Significant at the 0.01 level. Significant at the 0.05 level. ? Significant at the 0.10 level.

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

355

Table V. Results for Tobit Regressions for Publicly Listed Chinese Firms by Years of Seasoning, State-Owned Enterprises (SOEs), and Entrepreneurial Private Firms (EPFs)
This table reports the results of Tobit regressions, using pooled cross-sectional and time-series data. The dependent variable is long-term debt scaled by the market value of total assets (LTDMV ). We define independent variables as follows: tangibility denotes property, plant, and equipment divided by total assets; profitability denotes operating income divided by total assets; we measure growth by Tobin’s q; firm size denotes log (total assets); A_Shares denotes the proportion of outstanding shares in Chinese currency held by Chinese investors; B_Shares denotes the proportion of outstanding shares in foreign currency held by foreigners; State shares denotes the proportion of outstanding shares held by the State; legal-person shares denotes the proportion of outstanding shares held by the legal person shareholders. In addition, we include dummy variables for the following industries: manufacturing, retail/services/trade, mining and resources, real estate, utility, and conglomerate. The manufacturing industry is captured by the intercept. Proportion > 0 indicates the percentage of firms that had long-term debt in their capital structure. Standard errors appear in parentheses. Variable Number of Years Since IPO Model 1 (≤ 3 Years) Intercept Tangibility Profitability Growth (Tobin’s q) Firm size A_Shares (local investors) B_Shares (foreigners) State shares Legal-person shares Retail/services/trade Mining and resources Real estate Utility Conglomerate Proportion > 0 Log-likelihood N
??? ??

SOEs vs. EPFs Model 3 (SOEs) ?0.1073??? (0.0160) 0.0931??? (0.0039) ?0.0081?? (0.0032) ?0.0098??? (0.0006) 0.0111??? (0.0009) ?0.0040 (0.0129) ?0.0056 (0.0136) 0.0075 (0.0126) ?0.0001 (0.0126) ?0.0016 (0.0018) ?0.0110??? (0.0038) 0.0048 (0.0035) 0.0060? (0.0034) 0.0013??? (0.0005) 85.08% 6,486.70 4,952 Model 4 (EPFs) ?0.0862?? (0.0410) 0.0392??? (0.0138) ?0.0167? (0.0104) ?0.0060??? (0.0018) 0.0046 (0.0033) 0.0554?? (0.0287) – – 0.0606??? (0.0236) ?0.0080 (0.0124) 0.0037 (0.0206) – – 0.0009 (0.0011) 77.14% 278.39 175

Model 2 (> 3 Years) ?0.2458??? (0.0346) 0.00668??? (0.0056) ?0.0117??? (0.0037) ?0.0060??? (0.0008) 0.0129??? (0.0014) 0.1210??? (0.0303) 0.1172??? (0.0307) 0.1133??? (0.0301) 0.1082??? (0.0303) ?0.0046 (0.0025) 0.006 (0.0071) ?0.0020 (0.0042) ?0.0033 (0.0046) 0.0008 (0.0006) 84.03% 2,459.55 1,709

?0.1209??? (0.0182) 0.1025??? (0.0049) ?0.0127??? (0.0046) ?0.0108??? (0.0007) 0.0119??? (0.0011) 0.0065 (0.0143) 0.0002 (0.0156) 0.0130 (0.0129) 0.0045 (0.0130) 0.0021 (0.0022) ?0.0159??? (0.0043) 0.0092?? (0.0049) 0.0169??? (0.0044) 0.0009? (0.0006) 85.30% 4,534.93 3,544

Significant at the 0.01 level. Significant at the 0.05 level. ? Significant at the 0.10 level.

356

Financial Management

?

Summer 2008

lenders, plays a visible role for the listed firms in China. In unreported regressions, we find that total liabilities ratios are negatively related to tangibility. This finding suggests that reputation and relationships matter in the short-term liabilities market (Berger and Udell, 1994; Allen, Qian, and Qian, 2005). As for the negative relation between debt ratios and growth options, the results may simply be driven by the higher valuation of firms’ equity than by the underinvestment problem (Berens and Cuny, 1995). The results in Model 2 show a positive (negative) and significant effect of foreigners’ B_shares (legal-person shareholders’ A_shares) at the 5% (10%) level, respectively. Foreigners’ presence allows these firms to obtain more long-term debt. This is consistent with our conjecture that foreigners’ presence can increase transparency, enabling the firms to borrow more. The estimates for both the State’s and domestic individual investors’ ownerships are not significant. Thus, it appears that the State’s protectionist role does not affect the financial distress costs of the sample firms. The nonsignificant coefficient estimate for domestic individual shareholders suggests that diffused ownership is ineffective in providing adequate external monitoring. We observe significant differences in the long-term debt ratios across different industry groups. We set the manufacturing industry as the intercept in Models 3 and 4. Retail/services/trade is the only industry without a significant coefficient estimate. The results in Model 4 show that the relation of leverage to firm-specific variables is robust. However, the results for ownership characteristics and some industry memberships display variations from previous results in Models 1 through 3. We do not find any relation between leverage and any of the ownership structures. Further, the real estate industry attains a nonsignificant coefficient estimate and conglomerate’s previously negative estimate becomes positive. B. Effects of Seasoning on Long-Term Debt Models 1 and 2 in Table V report the results for subsamples based on number of years since their IPOs. The relation between leverage and firm-specific variables in both models is consistent with those in Model 4 in Table IV. However, results for ownership structures and industry membership in Model 2 differ from those in Model 4 in Table IV. The ownership structures of the seasoned firms significantly and positively influence their long-term debt ratios. These firms benefit from the State’s and legal-person investors’ ownership in lowering their financial distress costs. The positive associations of ownership in foreign investors’ B_shares and in domestic individual investors’ A_shares with seasoned firms’ longterm debt ratios are not consistent with our expectations. However, these results plausibly reflect a different facet of the Demirguc-Kunt and Maksimovic (1996) hypothesis. We noted earlier that the substantial quantity of nontradable equity was an impediment to transparency and that it confined the firms’ long-term debt ratios to be less than 10% of their total assets. Yet, trading of domestic individuals’ A_ and foreigners’ B_shares might reveal sufficiently relevant information about the seasoned firms, thus assisting them to obtain long-term debt within the stagnant long-term debt market. In general, these results are consistent (inconsistent) with evidence in Aggarwal and Mandelker (1987) and Mehran (1992) (Friend and Hasbrouck, 1988; Jensen, Solberg, and Zorn, 1992) for US firms. There is no evidence for any industry effect for the seasoned firms, but there is such a result for young firms, indicating some time dependence in the long-term debt utilization across industries. Overall, the results in Models 1 and 2 suggest that the degree of seasoning affects the determinants of capital structure choice.

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

357

C. SOEs, EPFs, and Long-Term Debt Models 3 and 4 in Table V report the results for SOEs and EPFs. Model 3 results for SOEs are consistent with Model 4 results in Table IV but differ from Model 4 results for EPFs in Table V. By construction, EPFs have no State or foreign ownerships. During our study period none of these firms belong to the utility or real estate industries. Firm size for EPFs is not significant, but it is positive and highly significant for SOEs. This finding is consistent with our expectations and results in Panel B of Table III. Both legalperson shareholders’ and domestic individual shareholders’ ownerships in EPFs are statistically significant at 1% and 5%, respectively. In contrast, none of the ownership structures for SOEs is statistically significant. These results are consistent with both the argument of the importance of reputation and relationships in obtaining credit (Allen, Qian, and Qian, 2005) and the likelihood that EPFs are family firms with highly concentrated ownership in A_shares. The mean difference of ownership in A_shares between EPFs and SOEs is positive and significant (see Table III). D. Robustness Tests In unreported results, we repeat separately the Tobit regressions after either dividing the sample into quartiles based on firm size or by introducing nonlinear terms for the ownership structures. These results are available from us on request. There are several factors, such as the degree of informational asymmetry, which can cause the determinants of leverage to be different between large and small firms. Therefore, conclusions from large-sample studies may not be robust across all sizes. We find that, with the exception of profitability, the results for firm-specific variables are consistent across all size quartiles. Profitability is nonsignificant for the lowest two quartiles. The results for ownership variables are also consistent with those reported previously. However, the industry effect differs across size quartiles. The reported industry effects appear to be driven by the largest sample firms. Overall, evidence shows that the largest firms can influence the results for the full sample. Next, to examine nonlinearity effects between ownership and the long-term debt ratio, we add the squared terms for all ownership structures in our empirical models. We find strong evidence of nonlinear effects across all ownership structures. 18 However, all of our earlier results for firm characteristics and industry membership variables remain unchanged. With squared ownership terms in the regressions, the diffused ownerships of individual investors’ A_shares and foreigners’ B_shares are both negatively related at the 1% level to the long-term debt ratio. The State’s concentrated and nontradable ownership is positively related to the long-term debt ratio, again at the 1% level. There are reversals in the signs of the coefficient estimates of the squared ownership variables. These findings suggest that there is an optimal level of ownership for each ownership category. Further, the presence of the State helps reduce the financial distress costs of the sample firms, thus allowing them to increase their debt capacity up until the optimal level of ownership. Further, diffused ownership of individual investors increases information asymmetry costs, thus lowering the ability of the sample firms to borrow more.

IV. Conclusion
We study long-term debt-financing patterns and the determinants of capital structure for almost all firms listed on the two Chinese stock exchanges between 1992 and 2001. Variables of
18 We extend the work of Morck, Shleifer, and Vishny (1988) and McConnell and Servaes (1990) on nonlinearity between ownership and firm value to ownership and capital structure.

358

Financial Management

?

Summer 2008

sample firms’ characteristics, ownership structures, and industry membership comprise possible determinants of their capital structure choices. 19 China has shown a spectacular average annual growth of at least 10% for several years, yet its financial markets are still in their infancy. Privatization notwithstanding, the SOEs still dominate the corporate landscape. During our study period, the State held, directly or indirectly, about 65% of the average firm’s equity in nontradable common stock. Illiquidity, generated by the State’s ownership lock-ups, impedes transparency. Chinese firms used less than 10% long-term debt in their capital structure. This figure is smaller than any reported for firms in developed and other emerging countries. Larger Chinese firms used more long-term debt. Consistent with illiquidity lock-ups, the annual long-term debt ratios of the listed Chinese firms remained almost constant despite a rapid increase in the size and trading activity in the stock market. The debt market consisted almost exclusively of informed bank debt. Traditional dominant long-term lenders, such as pension funds and insurance companies, were virtually nonexistent during our sample period. These observations suggest high levels of information asymmetry in the long-term debt market of this nascent economy. Financial contracting costs faced by Chinese firms appear to be far greater than are those faced by firms in other emerging markets, which have a much longer stock market history than China does. The proportion of tangible assets and firm size (profitability and growth options) exhibit positive (negative) relations, respectively, with the long-term debt ratio. These results are consistent with the evidence in other studies of the developed and emerging markets. Various ownership structures are related both linearly and nonlinearly to the sample firms’ longterm debt ratios. These findings are consistent with the arguments of information asymmetry and implicit State guarantees. The results on firm-specific characteristics for the EPFs with no State ownership are similar to those for the SOEs. The long-term debt ratios of the EPFs are positively related to the ownership of both domestic individual investors’ A_shares and legal persons’ A_shares. These firms are likely under family management with concentrated ownership. We also find evidence in support of the nonformal effects of reputation and personal relationships between lenders and borrowers. There is considerable interindustry variation in the use of long-term debt. The industry effects also exhibit temporal patterns. Overall, the determinants of capital structure, as identified for the developed and mature financial markets, are largely relevant for this nascent market.

Appendix A. An Overview of the Institutional Market in China 20
The institutional market in China is considerably smaller than those in developed economies. The total assets under management by institutional investors amounted to 10.6% of the GDP in December 2002. In any country, institutional investors play an important role in creating demand for public and private debt and equity issues, act as catalysts for innovation in financial products,
19 We thank a referee who pointed out that “If the State predominantly owns a core part of the equity, the tax stream, and the ownership of the banks, does capital structure matter?” At one level, certainly the dominant presence of the State should have an overbearing effect on how a firm may choose to finance its activities. However, we find that the commonly observed determinants of capital structure remain relevant in the Chinese context. The newly privatized SOEs are expected to be profitable and are not necessarily always protected by the State. See also footnote 11. 20

This appendix is based on Kim, Ho, and Giles (2003).

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

359

and provide the monitoring and oversight of entities they invest in. The institutional sector in China mainly comprises banks and large life insurance companies, pension funds, and investment funds. Life insurance is the largest sector outside of banking but is restricted to investing in only government bonds and bank deposits. The pension sector consists of the pay-as-you-go plans, individual-defined contribution accounts, and voluntary contribution plans. Both the open and closed investment funds comprise an insignificant proportion of the institutional landscape. By the end of 2002, while the banking sector attracted 75% of all household savings, the life insurance and pension sector accounted for only 4% of household savings. These statistics are in sharp contrast to developed markets such as the United States and Japan, where the life insurance and pension sectors accounted for 30% and 25% of the savings, respectively. Four major state commercial banks, accounting for 86% of all bank deposits at the end of 2002, dominate the banking sector. In addition, there are smaller regional banks. Banks are not allowed to own or invest in nonbank financial institutions and are prohibited from engaging in securities business. Historically, banks have been forced by the People’s Bank of China (PBC) and the State Council to lend to SOEs at low interest rates, regardless of the associated degree of risk. Banks remain the predominant purchasers of government bonds. The insurance sector is growing rapidly, registering an increase of nearly 45% between 2001 and 2002. There are 54 insurance companies, of which 19 are foreign firms. The total assets of all insurance companies amounted to 6.3% of GDP at the end of 2002, making insurance the largest nonbank financial institution investor. Since 2000, rules governing investments of insurance companies have been relaxed. Today, insurance companies are allowed to invest, in a limited way, in equities, higher-rated financial debentures and corporate bonds of SOEs, securities investment funds, and repos. At the end of 2002, there were some 20,000 enterprise pension funds with 6.6 million participants that had contributions totaling RMB 26 billion (US$3.2 billion) or 0.3% of the GDP. Most pension fund accumulations are used for payouts with very little accumulation of funds, most of which are invested in government bonds and bank deposits. This observation contrasts sharply with the United States, where pension fund assets comprised 47.5% of all institutional assets as of the year-end 1999. However, with the rapid expansion of individual and voluntary accounts, this sector should become a significant player in the future. Finally, the bond markets in China have predominantly served the public sector. Most of the bonds are issued by the federal and provincial governments (57.3%), central bank (5.3%), the stateowned policy banks (34.6%), and in few instances some of the SOEs (2.8%). At the end of 2000, the bond market was about 30% of GDP, much smaller than that in other emerging Asian markets. Most outstanding bonds were medium to long term in maturity, including the few corporate issues. Short-term government bonds, including Treasury bills, are virtually nonexistent. There were only six corporate bond issuers in 2000, six issuers in 2001, and 17 issuers in 2002. They raised a total of RMB 59.8 billion (US$7.3 billion) with an average maturity of 9.3 years. The funds raised were mainly for infrastructure investments. Some of the major issuers in 2002 were State Power Corporation, China International Trust and Investment Company, and China Guangdong Nuclear Group.

Appendix B: A Brief Review of the Chinese Stock Markets
China reopened its stock markets in the 1990s, nearly 50 years after they were closed in 1949. Much of the forward thrust toward economic liberalization has come since the establishment of the Shanghai Stock Exchange in December 1990 and the Shenzhen Stock Exchange in July 1991.

360

Table B1. Summary Statistics for the Chinese Economy

This table provides the summary statistics for the Chinese economy for the period of 1992-2001. We obtain our data from several sources: stock market values are from the Shanghai Stock Exchange Yearbook 2004 and the Shenzhen Stock Exchange Yearbook 1998, 2004; data on trade balance, exchange rate, external debt, and GDP growth rate are from the State Administration of Foreign Exchange; one-year time deposit rates and one-year lending rates are from The People’s Bank of China and the IMF Financial Statistics; and inflation rates are from the National Bureau of Statistics of China and the China Statistics Yearbook 2002. The Central Bank in China follows a “managed floating exchange rate” system. Exchange rate figures are average values for the year. Where applicable, amounts in US$ are based on the exchange rate for that particular year. Data for external debt include both short-term and long-term debt. 1992 18.4 53 414.7 14.2 6.4 3.8 7.2 5.2 5.51 69.3 14.4 7.56 8.64 60.0 183 510.1 13.5 14.7 10.0 23.1 ?10.7 5.76 83.6 13.9 10.08 10.98 42.1 291 455.2 12.6 24.1 7.8 31.8 7.3 8.62 92.8 17.1 10.98 10.98 40.7 323 581.2 10.5 17.1 5.6 33.8 18.1 8.35 106.6 15.2 10.98 12.06 115.6 530 670.7 9.6 8.3 14.1 38.1 19.5 8.31 116.3 14.2 8.33 10.08 209.2 745 730.3 8.8 2.8 23.1 41.7 46.2 8.29 130.9 14.5 5.67 8.64 234.3 851 761.9 7.8 ?0.8 24.4 41.1 46.6 8.28 146.0 15.2 4.59 6.39 1993 1994 1995 1996 1997 1998 1999 317.8 947 791.3 7.1 ?1.4 32.1 37.0 36.0 8.28 151.8 15.3 2.25 5.85 2000 577.3 1,086 855.9 8.0 0.4 53.5 37.5 34.5 8.28 145.7 13.5 2.25 5.85 2001 518.3 1,154 924.4 7.3 0.7 44.7 37.4 34.0 8.28 170.1 14.7 2.25 5.85

Stock market value ($ billion) Number of listed companies GDP per capita ($) GDP growth rate (real, %) Inflation rate (CPI, %) Stock market value/GDP (%) Foreign direct investment ($ billion) Trade balance ($ billion) Exchange rate (Chinese Yuan/US$) External debt ($ billion) External debt/GDP (%) 1-year time deposit rate (%) 1-year lending rate (%)

Financial Management
?

Summer 2008

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

361

Both stock exchanges have expanded rapidly and dramatically since then. As of December 31, 2001, the total market capitalization had reached US$518.3 billion. The Chinese stock market exhibits some distinctly different features from those of mature financial markets (Gordon and Li, 1999). For example, the State plays a dual role as a regulatory agency and owner of firms; further, there is a high degree of market segmentation in tradable and nontradable shares. A two-tier regulatory structure was established in 1992. At the first tier, the main regulatory body overseeing the stock market activities and responsible for overall policy is the People’s Bank of China (PBC), China’s Central Bank. PBC’s responsibilities include listing stocks, licensing financial institutions and foreign agents, and taking disciplinary action when required. Thus, PBC’s functions are similar to those of the Securities and Exchange Commission (SEC) in the United States. At the second tier is the China Securities Regulatory Commission (CSRC). It is responsible for the day-to-day regulations and activities, such as the identification of firms for listing. Publicly listed firms represent only a small subset of China’s enterprises. Allen, Qian, and Qian (2005, p. 79, Table 6B) report that private sector (State-owned or listed firms) employment increased (decreased) from 65.7% to 76.2% (from 34.3% to 23.8%), respectively, during 19952002. The listed firms are usually former large or medium-size SOEs with a strong performance record. They go through a significant restructuring process before their IPOs. Accounting systems are converted to international standards; information disclosure standards set by the CSRC have to be met. Banks hold much of the debt issued by the SOEs. The Chinese banking structure is highly concentrated with four state banks, referred to as the Big Four, and 12 commercial banks. Commercial banks have no obligation to lend to the SOEs and therefore hold very little of the SOEs’ debt. A review of the tax system in China shows that it has many features in common with those in most other countries. Enterprises, including the SOEs, joint ventures, and private enterprises pay taxes on taxable income at a rate comparable to those observed in developed countries. As in Western economies, interest is a tax-deductible expense for firms. The laws also allow for tax-loss carry-forward to be offset against taxable income of subsequent years. There was a substantial overhaul of the corporate tax legislation that became effective on January 1, 1994 (Shu-ki and Yuk-shing, 1994). Table B1 provides yearly statistics of the Chinese market between 1992 and 2001. At the end of 2001, the total market capitalization stood at US$518 billion, or 44.7% of the GDP. This ratio was less than 10% until 1995. Thus, listed firms have become an important pillar of economic output in the country. Inflation has been almost nonexistent since 1997, allowing for low interest rates on deposits and loans. Furthermore, China enjoyed a steady annual inflow of US$30 to US$40 billion in foreign direct investment between 1994 and 2001. This inflow has contributed to a healthy annual growth rate in excess of 10% during our sample period. These statistics speak to the rapid transformation of the Chinese economy and the growing importance of the capital markets in capital formation.

References
Aggarwal, A. and G.N. Mandelker, 1987, “Managerial Incentives and Corporate Investment and Financing Decisions,” Journal of Finance 42, 823-837. Allen, D.E. and H. Mizuno, 1989, “The Determinants of Corporate Capital Structure: Japanese Evidence,” Applied Economics 21, 569-586.

362

Financial Management

?

Summer 2008

Allen, F., J. Qian, and M. Qian, 2005, “Law, Finance and Economic Growth in China,” Journal of Financial Economics 77, 57-116. Asian Economic News, 1999, “China Says Bankruptcy Part of Financial Reform,” January 25. Bancel, F. and U.R. Mittoo, 2004, “Cross-Country Determinants of Capital Structure Choice: A Survey of European Firms,” Financial Management 33, 103-132. Barclay, M.J. and C.W. Smith, Jr., 1995, “The Maturity Structure of Corporate Debt,” Journal of Finance 50, 609-631. Berens, J.L. and C.J. Cuny, 1995, “The Capital Structure Puzzle Revisited,” Review of Financial Studies 8, 1185-1208. Berger, A.N. and G.F. Udell, 1994, “Relationship Lending and Lines of Credit in Small Firm Finance,” Journal of Business 68, 351-381. Berger, P.G., E. Ofek, and D.L. Yermack, 1997, “Managerial Entrenchment and Capital Structure Decisions,” Journal of Finance 52, 1411-1438. Booth, L., V Aivazian, A. Demirguc-Kunt, and V Maksimovic, 2001, “Capital Structures in Developing . . Countries,” Journal of Finance 56, 87-130. Bradley, M., G.A. Jarrell, and E.H. Kim, 1984, “On the Existence of an Optimal Capital Structure: Theory and Evidence,” Journal of Finance 37, 857-878. Cao, S., 1998, “Bankruptcy Law in China,” Harvard China Review 1, 36-39. Che, J. and Y. Qian, 1998, “Insecure Property Rights and Government Ownership of Firms,” Quarterly Journal of Economics 108, 467-496. Chung, K.H. and S.W. Pruitt, 1994, “A Simple Approximation of Tobin’s q,” Financial Management 23, 70-74. DeAngelo, H. and R.W. Masulis, 1980, “Optimal Capital Structure under Corporate and Personal Taxes,” Journal of Financial Economics 8, 3-21. de Miguel, A. and J. Pindado, 2001, “Determinants of Capital Structure: New Evidence from Spanish Panel Data,” Journal of Corporate Finance 7, 77-99. Demirguc-Kunt, A. and V Maksimovic, 1996, “Stock Market Development and Firm Financing Choices,” . World Bank Economic Review 10, 341-369. Demirguc-Kunt, A. and V Maksimovic, 1999, “Institutions, Financial Markets and Firm Debt Maturity,” . Journal of Financial Economics 54, 295-336. Diamond, D.W., 1991, “Debt Maturity Structure and Liquidity Risk,” Quarterly Journal of Economics 106, 709-738. Diamond, D.W., 1993, “Seniority and Maturity of Debt Contracts,” Journal of Financial Economics 33, 341-368. Flannery, M. J., 1986, “Asymmetric Information and Risky Debt Maturity Choice,” Journal of Finance 41, 19-38. Friend, I. and J. Hasbrouck, 1988, “Determinants of Capital Structure,” Research in Finance 7, 1-20. Friend, I. and L.H.P. Lang, 1988, “An Empirical Test of the Impact of Managerial Self-Interest on Corporate Capital Structure,” Journal of Finance 43, 271-281. Gang, Y. and A. Wong, 1998, “A New Listed Company Law: CSRC Guidelines on Articles of Association for Listed Companies in China,” O’Melveny & Myers LLP. Available at: http://www.omm.com/ webdata/content/publications/COMPANYLAW.PDF.

Bhabra, Liu, & Tirtiroglu

?

Capital Structure Choice in a Nascent Market

363

Gordon, R.H. and W. Li, 1999, “Government as a Discriminating Monopolist in the Financial Market: The Case of China,” NBER Working Paper 7110. Grier, P. and J. Zychowicz, 1994, “Institutional Investors, Corporate Discipline, and the Role of Debt,” Journal of Economics and Business 46, 1-11. Grossman, S.J., 1976, “On the Efficiency of Competitive Stock Markets Where Trades Have Diverse Information,” Journal of Finance 37, 573-585. Grossman, S.J. and J.E. Stiglitz, 1980, “On the Impossibility of Informationally Efficient Markets,” American Economic Review 70, 393-408. Gupta, M.C., 1969, “The Effect of Size, Growth, and Industry on the Financial Structure of Manufacturing Companies,” Journal of Finance 24, 517-529. Harris, M. and A. Raviv, 1991, “The Theory of Capital Structure,” Journal of Finance 46, 297-355. Hart, O. and J. Moore, 1990, “Property Rights and the Nature of the Firm,” Journal of Political Economy 98, 1119-1158. Haugen, R.A. and L.W. Senbet, 1988, “Bankruptcy and Agency Costs: Their Significance to the Theory of Optimal Capital Structure,” Journal of Financial and Quantitative Analysis 23, 27-38. Hull, R.M., 1999, “Leverage Ratios, Industry Norms, and Stock Price Reaction: An Empirical Investigation of Stock-for-Debt Transactions,” Financial Management 28, 32-45. Jensen, M.C. and W.H. Meckling, 1976, “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure,” Journal of Financial Economics 3, 305-360. Jensen, G.R., D.P. Solberg, and T.S. Zorn, 1992, “Simultaneous Determination of Insider Ownership, Debt, and Dividend Policies,” Journal of Financial and Quantitative Analysis 27, 247-264. Jia, J., Q. Sun, and W.H.S. Tong, 2005, “Privatization through an Overseas Listing: Evidence from China’s H-Share Firms,” Financial Management 34, 5-30. Kale, J.R. and T.H. Noe, 1990, “Risky Debt Maturity Choice in a Sequential Game Equilibrium,” Journal of Financial Research 13, 155-166. Kim Y., I.S.M. Ho, and M.S. Giles, 2003, “Developing Institutional Investors in People’s Republic of China,” The World Bank Country Study Paper. Lee, C.J. and X. Xiao, 2004, “Tunneling Dividends,” Tulane University Working Paper. Mackie-Mason, J.K., 1990, “Do Taxes Affect Corporate Financing Decisions?” Journal of Finance 45, 1471-1492. McConnell, J.J. and H. Servaes, 1990, “Additional Evidence on Equity Ownership and Corporate Value,” Journal of Financial Economics 27, 595-612. Mehran, H., 1992, “Executive Incentive Plans, Corporate Control, and Capital Structure,” Journal of Financial and Quantitative Analysis 27, 539-560. Modigliani, F. and M. Miller, 1963, “Corporate Income Taxes and the Cost of Capital: A Correction,” American Economic Review 53, 433-442. Mohamad H.M., 1995, “Capital Structure in Large Malaysian Companies,” Management International Review 35, 119-130. Mohammed, M.A., L.G. Perry, and J.N. Rimbey, 1998, “The Impact of Ownership Structure on Corporate Debt Policy: A Time-Series Cross-Sectional Analysis,” Financial Review 33, 85-98.

364

Financial Management

?

Summer 2008

Morck, R., A. Shleifer, and R.W. Vishny, 1988, “Management Ownership and Market Valuation: An Empirical Analysis,” Journal of Financial Economics 20, 293-316. Myers, S., 1977, “Determinants of Corporate Borrowing,” Journal of Financial Economics 5, 147-175. Myers, S., 1984, “The Capital Structure Puzzle,” Journal of Finance 39, 575-592. Myers, S. and N.S. Majluf, 1984, “Corporate Financing and Investment Decisions When Firms Have Information that Investors Do Not Have,” Journal of Financial Economics 13, 187-221. Norton Rose Newsletter, China Legal Watch, June 2005-September 2005, Issue 8. Prowse, S.D., 1990, “Institutional Investment Patterns and Corporate Financial Behavior in the US and Japan,” Journal of Financial Economics 27, 43-66. Raad, E. and R. Ryan, 1995, “Capital Structure and Ownership Distribution of Tender Offer Targets: An Empirical Study,” Financial Management 24, 46-56. Rajan, R.G., 1992, “Insiders and Outsiders: The Choice between Informed and Arm’s Length Debt,” Journal of Finance 47, 1367-1400. Rajan, R.G. and L. Zingales, 1995, “What Do We Know about Capital Structure? Some Evidence from International Data,” Journal of Finance 50, 1421-1460. Rozeff, M.S., 1982, “Growth, Beta and Agency Costs as Determinants of Dividend Payout Ratios,” Journal of Financial Research 5, 249-259. Scott Jr., J.H., 1977, “Bankruptcy, Secured Debt, and Optimal Capital Structure,” Journal of Finance 32, 1-19. Shah, K., 1994, “The Nature of Information Conveyed by Pure Capital Structure Changes,” Journal of Financial Economics 36, 89-126. Shu-ki, T. and C. Yuk-shing, 1994, “China’s Tax Reforms of 1994: Breakthrough or Compromise?” Asian Survey 34, 769-788. Shyam-Sunder, L. and S. Myers, 1999, “Testing Static Trade-off against Pecking Order Models of Capital Structure,” Journal of Financial Economics 51, 219-244. Smith, C.W., Jr. and J.B. Warner, 1979, “Bankruptcy, Secured Debt, and Optimal Capital Structure: Comment,” Journal of Finance 34, 247-251. Smith, C.W., Jr. and R.L. Watts, 1992, “The Investment Opportunity Set and Corporate Financing, Dividend and Compensation Policies,” Journal of Financial Economics 32, 263-292. Stulz, R.M., 1990, “Managerial Discretion and Optimal Financing Policies,” Journal of Financial Economics 26, 3-28. Titman, S. and R. Wessels, 1988, “The Determinants of Capital Structure Choice,” Journal of Finance 43, 1-19. Wald, J.K., 1999, “How Firm Characteristics Affect Capital Structure: An International Comparison,” Journal of Financial Research 22, 161-188. Wei, Z., O. Varela, J. D’Souza, and M.K. Hassan, 2003, “The Financial and Operating Performance of China’s Newly Privatized Firms,” Financial Management 32, 107-126. Xu, X. and Y. Wang, 1997, “Ownership Structure, Corporate Governance, and Corporate Performance: The Case of Chinese Stock Companies,” Amherst College and the World Bank Working Paper.



友情链接: 医学资料大全 农林牧渔 幼儿教育心得 小学教育 中学 高中 职业教育 成人教育 大学资料 求职职场 职场文档 总结汇报