Capital structure of Chinese listed SMEs: an agency theory perspective

• DOI: 10.1007/s11187-016-9729-6
• Publication Date: 2016-05-02T07:24:26Z
• Authors: Wei Huang; Agyenim Boateng; Alexander Newman
• Keywords: Leverage (statistics); Agency cost

Prior work examining the antecedents of capital structure for small and medium-sized enterprises in emerging markets is limited. This paper sheds light on how corporate governance mechanisms adopted by firms newly established Growth Enterprise Market (GEM) China influence their use debt. We find that financial leverage GEM positively influenced executives' shareholding excess cash compensation. Ownership concentration appears to reduce leverage, whereas percentage tradable shares increases leverage. In contrast, institutional investors' does not level Traditional factors such as tax operating flow are insignificant explaining debt levels among firms.