Determination of capital structure: China non-stated-owned enterprises

Abstract

This article uses a new database containing accounting data from more than 5,000 Chinese non-state-owned listed companies (2010-2016) to study their capital structure characteristics. I follow Liu’s regression model and the result shows that the leverage ratio of Chinese companies increases as the company's income and fixed assets increase, but decreases as the company's size increases. This may because profitable companies will borrow more as they want to reduce their tax. Also, Chinese companies have a concentrated ownership structure which may lead to big companies to have a low leverage ratio.