Author ORCID Identifier

Jinlan Ni

Document Type

Article

Publication Date

2008

Publication Title

The Chinese Economy

Volume

41

Issue

1

First Page

97

Last Page

113

Abstract

The pecking-order theory of capital structure, which predicts that firms prefer internal to external finance, is one of the most influential theories of corporate leverage. This article examines whether the financial structure of China's listed companies follows a pecking order from debt to equity. Using the entire cross-section sample of China's listed companies in 2004, the authors find no evidence that China's listed companies follow a pecking order when they need funds to finance investment projects. Further subgroup analyses indicate that big companies follow a pecking order and small and medium companies do not. These results suggest that the Chinese capital market is still under development. However, the large companies face a relatively looser financing environment than the small ones.

Comments

This is an Accepted Manuscript of an article published by Taylor & Francis in The Chinese Economy on 9 December 2014, available online: https://www.tandfonline.com/doi/abs/10.2753/CES1097-1475410105.

Download

Included in

Economics Commons

Share

COinS