Impact of Leverage on Investment by Major Shareholders

Evidence from Listed Firms in China

Datos Bibliográficos

ID12917907
AutoresYuan Yuan (0000-0001-7440-8939, Waseda University, autor de correspondencia), Kazuyuki Motohashi (0000-0003-0985-5331, The University of Tokyo)
Año2014
Volumen7
Número3
Páginas299-319
Fecha de publicación2014-09-02
Peer ReviewedSí
Open AccessNo
TipoARTICLE
RevistaChina Economic Journal (JOURNAL)
Identificadores de la revistaISSN: 1753-8963 • E-ISSN: 1753-8971
EditorialRoutledge (PUBLISHER • GB)
DOI10.1080/17538963.2014.947707
OpenAlexW2111787476
IdiomaEN
Referencias citadas20

In this paper, we analyze whether leverage had impacts on investment in the period 1999–2009, and whether these impacts, if they exist, differed among companies with different investment opportunities and with different major shareholders. In order to identify governance with different major shareholders, we grouped China’s listed firms into central government owned firms (CSOEs), local government owned firms (LSOEs) and non-state-owned firms (NONSOEs). Our results are as follows. First, our analysis reveals that leverage does have significantly negative impacts on CSOE, LSOE and NONSOE investments. Secondly, in LSOEs and NONSOEs, negative leverage impacts on low-growth firms are stronger than average firms, implying that a disciplinary effect of leverage over investment can be found in LSOEs and NONSOEs. Finally, however, no such effect can be observed in CSOEs. We have provided a first finding that the effect of leverage varies according to a firm’s major shareholders

Business · China · Corporate governance · Economics · Financial system · Investment (military · Leverage (statistics · Monetary economics · Shareholder · Auditing, Earnings Management, Governance · Corporate Finance and Governance · Fiscal Policy and Economic Growth · Finance