DOES CORPORATE OWNERSHIP AFFECT CAPITAL STRUCTURES AND ADJUSTMENT OF CAPITAL STRUCTURES — EVIDENCES FROM CHINESE LISTED COMPANIES

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Abstract

In Chinese transition economy, compared with state-owned firms, private firms face higher financial friction in financing activities, but have more incentive to adjust toward optimal capital structure to maximize the shareholders‟ benefit. Based on panel data of China’s listed firms from 1998 to 2007, we compare the capital structures of state-owned and privately-owned listed firms. The empirical results show that there is structural difference in static capital structure between state-owned and private listed firms while controlling for firm characteristics. We then investigate the difference in dynamics of the capital structure between these two groups of firms. Further study results tell us that the adjustment to an optimal capital structure to be faster for the private firm than for the state-owned firm.

Keywords: Corporate Ownership, Financial Friction, Capital Structure Adjustment, Ownership Discrimination

How to cite this paper: Wang, Z., Lin, W., & Keefe, M. O. (2009). Does corporate ownership affect capital structures and adjustment of capital structures — evidences from Chinese listed companies. [Special issue]. Corporate Ownership & Control, 6(4-5), 532-541. https://doi.org/10.22495/cocv6i4sip4