TY - JOUR
T1 - Capital structure dynamics with restricted equity issuance
T2 - Evidence from Chinese post-IPO firms
AU - Gombola, Michael
AU - Liu, Feng Ying
AU - Chou, De Wai
PY - 2019/3/1
Y1 - 2019/3/1
N2 - Chinese firms offer unique insight into capital structure dynamics because tradeoffs and constraints involved differ greatly from Western firms. Greater constraints on equity issuance combined with lesser tax benefits and bankruptcy cost should present fewer incentives for a target capital structure. Nevertheless, we find the capital structure behavior over time of Chinese firms is similar to US firms in gravitating toward a common mean and exhibiting at least as much persistence, and a similar speed of adjustment. Perhaps capital structure dynamics of both American and Chinese firms are based on managerial preferences that stem from tradition or observed practices rather than any of the extant theories.
AB - Chinese firms offer unique insight into capital structure dynamics because tradeoffs and constraints involved differ greatly from Western firms. Greater constraints on equity issuance combined with lesser tax benefits and bankruptcy cost should present fewer incentives for a target capital structure. Nevertheless, we find the capital structure behavior over time of Chinese firms is similar to US firms in gravitating toward a common mean and exhibiting at least as much persistence, and a similar speed of adjustment. Perhaps capital structure dynamics of both American and Chinese firms are based on managerial preferences that stem from tradition or observed practices rather than any of the extant theories.
KW - Capital structure
KW - Chinese IPOs
KW - Financial leverage
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U2 - 10.1016/j.apmrv.2018.07.002
DO - 10.1016/j.apmrv.2018.07.002
M3 - Article
AN - SCOPUS:85057039595
VL - 24
SP - 72
EP - 85
JO - Asia Pacific Management Review
JF - Asia Pacific Management Review
SN - 1029-3132
IS - 1
ER -