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Ownership structure and collateral requirements: Evidence from China's listed firms

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  • An, Can
  • Pan, Xiaofei
  • Tian, Gary Gang

Abstract

This paper examines the effect of ownership structure on collateral requirements using a sample of China's listed firms from 2007 to 2009. We find that compared to privately controlled companies, state-controlled companies are less likely to be required to pledge collateral, and such a difference is more pronounced for firms in troubled industries. The empirical results also show that the effect of state control on collateral requirements is weaker in companies with more foreign ownership. Moreover, the effect of state control on collateral requirements is weaker in companies with more third party guarantees. Finally, we find that the effect of state control on collateral requirements is more pronounced for firms operating in regions with more government intervention.

Suggested Citation

  • An, Can & Pan, Xiaofei & Tian, Gary Gang, 2014. "Ownership structure and collateral requirements: Evidence from China's listed firms," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 168-178.
  • Handle: RePEc:eee:finana:v:36:y:2014:i:c:p:168-178
    DOI: 10.1016/j.irfa.2014.10.009
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    Cited by:

    1. repec:eee:reveco:v:49:y:2017:i:c:p:17-57 is not listed on IDEAS
    2. Can An & Xiaofei Pan & Gary Tian, 2016. "How Does Corporate Governance Affect Loan Collateral? Evidence from Chinese SOEs and Non-SOEs," International Review of Finance, International Review of Finance Ltd., vol. 16(3), pages 325-356, September.

    More about this item

    Keywords

    Ownership; Collateral requirements; Marketization;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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