Work

Ownership Structure and Capital Structure: Moderating Effect of Product Market Maturity

Year: 2023

Type: article

Abstract: This study aims to analyze the impact of ownership structure on corporate capital structure, moderated by product market maturity. It employs a sample of 19950 firm-year observations for 1995 firms, which are listed companies on the A-Shares Board in Shanghai and Shenzhen stock exchange markets for the year 2011 to 2020. The data were analyzed using fixed effect regression. A two-step system GMM was used for the robustness test. Results suggested that state and institutional ownership negatively affect the firm’s leverage, which supports the resource-based theory. Furthermore, this study revealed that the negative effect of state ownership and institutional ownership on leverage diminished when firms are located in provinces with more matured product markets. These findings have important implications for the Chinese government in terms of developing and enforcing capital structure regulations to promote de-leverage.

Source: SAGE Open

DOI: 10.1177/21582440231218787

Authors: Chu Wang, Char-Lee Lok, Lian Kee Phua

Institution: Universiti Sains Malaysia

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $1,200

Funder: Ministry of Higher Education, Malaysia