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How dynamic capital structure works in China?

Yang Ying, Mohamed Albaity, Che Hashim Bin Hassan

About The Authors


Yang Ying
University of Malaya
Malaysia

Mohamed Albaity
University of Malaya
Malaysia

Che Hashim Bin Hassan
University of Malaya
Malaysia


Abstract


We analyze the capital structure decision for 615 Chinese listed firms covering a period from 2008 to 2013. We posit that capital structure decisions are inherently dynamic. We apply both the book total debt and market total debt to formula dynamic capital structure models. Using a system GMM estimator we find: (i) firms adjust deviations from an optimal targets with the different speeds for book and market debts; (ii) total debt leverage has changed in downward trend; (3) firm size and non-debt tax shield have become the most important determinants of debt leverage; (4) dividend is not used for tunnel cash from debt-holders to shareholders; (5) human recourse factors emerged with significant influence on capital structure decision. This extension allows us to establish new evidence of determinants of capital structure from a human source perspective

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Keywords


Capital Structure; China; GMM; Speed of Adjustment; Macroeconomic and Human Resources

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IJRBT introduces peer-review from its first Edition onwards. The researchers submitting their papers for publication should review atleast one technical paper from their domain. The manuscript also undergoes mandatory procedural review with IJRBT review and scholar panel.