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Determinants of C hinese equity financing behaviours: traditional model and the alternatives
Author(s) -
Chen Xiaoyan,
Ling Xin
Publication year - 2017
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12151
Subject(s) - endogeneity , equity (law) , capital structure , spurious relationship , economics , econometrics , context (archaeology) , corporate governance , business , finance , debt , statistics , political science , law , paleontology , mathematics , biology
This paper studies the capital structure of C hinese SEO issuers, from the perspective of equity. The traditional model is subject to several problems including spurious correlation, cumulative measure and endogeneity. System GMM (generalised method of moments) is superior to the traditional model. Corporate governance is positively correlated to firm equity level; however, it does not affect incremental managerial adjustments to equity. In addition, state control positively influences equity level but has a negative effect on incremental managerial adjustment. Mixed evidence is found for the established capital structure theories in the C hinese context.