The Influences of Ownership Structure: evidence from China

Abstract

This paper examines that the impact of firm-specific characteristic on firm capital structure in Chinese-listed companies and attempts to solve a few puzzles existing in previous related studies. The key factors include state ownership, institutional ownership, and the risk of default. From the analyses of all samples, our results confirm that the expected default risk is important in explaining debt decision, but the influence of ownership structure is not significant. However, after separating high- and low-level from the firm leverage we find that the ownerships of state and institutions have a positive effect on corporate leverage in high-leveraged companies but not in low-leveraged firms. In addition, the positive impacts of external governance commonly occur in large firms. The observed findings provide some important implications for the role of external governance in Chinese-listed companies.

Determinants of Capital Structure:The Case in Vietnam

“…Foreign ownership is the only factor studied to be inversely correlated to the capital structure. The finding is consistent with most of the studies supporting this negative relationship (Huang, Lin, & Huang, 2011;Li, Yue, & Zhao, 2009). According to the results of statistical method approaches, we do not find evidence for the influence of managers' shareholding and the independence of the board of directors on firm's choice of capital structure (see Table 4).…”

“…Thus, they tend to use less debt because they do not benefit from the tax shield effect. Huang, Lin and Huang (2011), investigating Chinese listed companies in the 5-year period (from 2002 and 2005) and reported similar results. However, in their research, they explained that foreign stockholders who are mainly institutional investors with better ability to oversee corporate management will help to control over-investment by managers or contribute to reducing agency costs incurred due to the agency conflicts.…”

Effect of Ownership Structure on Corporate Diversification of Listed Firms in Kenya

“…For this reason, capital structures interfere with the connection between ownership structure and corporate diversification. From the studies, the presence of institutional investors positively affects the capital structure (Brailsford, Oliver, & Pua, 2002); (Huang, Lin, & Huang, 2011). Other studies have document negative (Çinko & Kasaboğlu, 2017), no significant relationship (Pirzada, Mustapha, & Wickramasinghe, 2015) between institutional ownership and capital structure.…”

“…Researchers have dwelled instead of direct relationships. For instance, direct relationship between capital structure given institutional ownership (Brailsford et al, 2002); (Huang et al, 2011); (Pirzada et al, 2015); (Çinko & Kasaboğlu, 2017), foreign ownership (Sivathaasan, 2013); (Khasawneh & Staytieh, 2017); (Thai, 2019) has been conducted. Institutional and foreign ownership have been linked directly to corporate diversification by (Gharbi & Jarboui, 2017) and respectively.…”

Agency Theory, Ownership Structure and Capital Structure: An Empirical Investigation in The Indian Automobile Industry

“…Kumar (2012) advocated that the shareholding by institutional investors and managers affect firm performance while the equity ownership by foreign and corporate shareholders do not influence firm performance However, there was no evidence in favour of endogeneity of ownership structure significantly. Huang, Lin and Huang (2011) revealed ownerships of state and institutions have a positive effect on corporate leverage in high-leveraged companies but not in low-leveraged firms. Pindado and de La Torre (2011) in a study of Spanish companies, points out that capital structure is partly determined by the incentives and the goals of those who are in control of the firm because of managerial entrenchment and rent expropriation phenomena.…”