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/lp/addleton-academic-publishers/determinants-of-capital-structure-further-evidence-from-china-pAtwJTxC6R
- Publisher
- Addleton Academic Publishers
- Copyright
- © 2009 Addleton Academic Publishers
- ISSN
- 1842-3191
- eISSN
- 1938-212X
- Publisher site
- See Article on Publisher Site
Abstract
This paper aims to provide empirical evidence for the relationship between a firm’s choice of capital structure and its productive environment using three basic hypotheses: efficiency risk, franchise value and political power. It considers the impact of a firm’s relative efficiency, market share and industry concentration on capital structure decisions. It uses non-parametric data envelopment analysis (DEA) to measure the relative efficiency. We found evidence to support the franchise value hypothesis that predicted a negative relationship between leverage and the firms’ relative efficiency. It is also found relatively large firms in the industry tend to use a lower level of leverage. JEL: G14, G31, G32 Keywords: capital structure, relative efficiency, market structure, China, DEA
Journal
Economics, Management, and Financial Markets – Addleton Academic Publishers
Published: Jan 1, 2011