Adjustment Behaviour Of Leverage In ChineseudFirms: An Empirical Analysis Of Overall Firms,udState-Owned And Non State-Owned Enterprises

摘要

This study investigates the adjustment behaviour and adjustment speed of Chinese frmsudwith regards to capital structure. For this purpose, the study utilises an extensive set of dataudof 867 A-Listed non-fnancial Chinese frms over ten years from 2003 to 2012. This studyudadds useful insights on adjustment behaviour and speed of Chinese frms with regards toudfrm-specifc and country level determinants of leverage policy. To fnd out the adjustmentudspeed, the study uses multiple generalised method of moments (GMM) for the purposeudof robustness. Both of the GMMs report positive and their adjustment coefcients areudstatistically signifcant which implies that Chinese frms follow a target level of leverage byudadjusting their current leverage policy. Chinese frms take almost 3.5 years for adjustment.udThe analysis is extrapolated to state owned enterprises (SOEs) and non-state ownedudenterprises (NSOEs) and it is found that SOEs take longer time to adjust to their leverageudpolicy as compared to NSOEs. The results are consistent for both Arellano Bond (GMM1)udand Blundell and Bond (GMM2) dynamic panel data models.