IDEAS home Printed from https://ideas.repec.org/a/taf/rcejxx/v7y2014i3p299-319.html
   My bibliography  Save this article

Impact of Leverage on Investment by Major Shareholders: Evidence from Listed Firms in China

Author

Listed:
  • Yuan Yuan
  • Kazuyuki Motohashi

Abstract

In this paper, we analyze whether leverage had impacts on investment in the period 1999–2009, and whether these impacts, if they exist, differed among companies with different investment opportunities and with different major shareholders. In order to identify governance with different major shareholders, we grouped China’s listed firms into central government owned firms (CSOEs), local government owned firms (LSOEs) and non-state-owned firms (NONSOEs). Our results are as follows. First, our analysis reveals that leverage does have significantly negative impacts on CSOE, LSOE and NONSOE investments. Secondly, in LSOEs and NONSOEs, negative leverage impacts on low-growth firms are stronger than average firms, implying that a disciplinary effect of leverage over investment can be found in LSOEs and NONSOEs. Finally, however, no such effect can be observed in CSOEs. We have provided a first finding that the effect of leverage varies according to a firm’s major shareholders.

Suggested Citation

  • Yuan Yuan & Kazuyuki Motohashi, 2014. "Impact of Leverage on Investment by Major Shareholders: Evidence from Listed Firms in China," China Economic Journal, Taylor & Francis Journals, vol. 7(3), pages 299-319, September.
    • Handle: RePEc:taf:rcejxx:v:7:y:2014:i:3:p:299-319
    DOI: 10.1080/17538963.2014.947707
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/17538963.2014.947707
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/17538963.2014.947707?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rcejxx:v:7:y:2014:i:3:p:299-319. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rcej .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.