《Do Chinese publicly listed companies adjust their capital structure toward a target level》.pdf

China Economic Review 20 (2009) 662–676 Contents lists available at ScienceDirect China Economic Review Do Chinese publicly listed companies adjust their capital structure toward a ☆ target level? Yanmin QIAN a, Yao TIAN b, Tony S. WIRJANTO c,⁎ a School of Economics, Zhejiang University, Hangzhou, Zhejiang, Peoples Republic of China b School of Business, University of Alberta, Edmonton, Alberta, Canada T6G 2R6 c School of Accounting Finance and Department of Statistics Actuarial Science, University of Waterloo, Waterloo, Ontario, Canada N2L 3G1 a r t i c l e i n f o a b s t r a c t Article history: We study the determinants of capital structure for 650 Chinese publicly listed companies over the Received 6 May 2008 period from 1999 to 2004. We posit that a firms decision on capital structure is inherently dynamic, Received in revised form 25 May 2009 and estimate the resulting dynamic capital structure model. The main findings of the paper are as Accepted 4 June 2009 follows: (i) Chinese firms adjust toward an equilibrium level of debt ratio in a given year at a very slow rate; (ii) firm size, tangibility and state shareholdings are positively associated with firms JEL classifi cation: leverage ratio, while profitability, non-debt tax shields, growth and volatility are negatively related G32 to firms leverage ratio; (iii) lagged profitability has a negligibly small and positive impact on firms Keywords