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| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | Determinants of Capital Structure of Chinese Listed Firms |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 60 |
| Date | 2018 |
| Abstract Text | In this study, I analyze the capital structure problem of Chinese listed firms by examining the capital structure determinants in the first part and testing selected theories in the second part. A hand-collected sample consisting 1220 Chinese listed firms from 2007 to 2016 is used to offer the latest view of this problem. Considering the hierarchical structure of the dataset, this study applies the hierarchical linear modeling technique to assess the relative importance of the time, firm and industry level and estimate the effects of relevant characteristics in determining the capital structure. Results show that the time- and firm-level account for the majority of leverage variation. Meanwhile, a set of determinants have been found significant in explaining firms’ leverage. The tests of the market timing theory and the pecking order theory get some new findings compared to previous literature. With a direct measure of the implied cost of equity, the Market Timing Testing Model shows firms tend to increase their leverage when their cost of equity is high, implying the market timing theory holds for the Chinese listed firms nowadays. As for the pecking order theory, testing results show the first rung of pecking order doesn’t hold while on the second rung, firms prefer debt financings over equity financing. Instead of confirming the suitability of the theory on my sample, I find out the above results are more likely due to firms’ limited access to the financial markets. This conclusion is verified by the relevant findings in the first part of the study. |
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