Determinants of Capital Structure: Further Evidence from China

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Seelanatha, Senarath Lalithananda (2010) Determinants of Capital Structure: Further Evidence from China. Economics, Management, and Financial Markets, 5 (4). pp. 106-126. ISSN 1842-3191


This paper aims to provide empirical evidence for the relationship between a firm’s choice of capital structure and its productive environment using three basic hypotheses: efficiency risk, franchise value and political power. It considers the impact of a firm’s relative efficiency, market share and industry concentration on capital structure decisions. It uses non-parametric data envelopment analysis (DEA) to measure the relative efficiency. We found evidence to support the franchise value hypothesis that predicted a negative relationship between leverage and the firms’ relative efficiency. It is also found relatively large firms in the industry tend to use a lower level of leverage

Item type Article
Subjects Historical > Faculty/School/Research Centre/Department > School of Accounting
Historical > FOR Classification > 1402 Applied Economics
Historical > SEO Classification > 9001 Financial Services
Keywords ResPubID20637, capital structure, relative efficiency, market structure, China, data envelopment analysis
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