The reform of property law and debt concentration choices

This paper utilises the enactment of the Property Law as a quasi-natural experiment to investigate the impact of secured property rights reform on corporate debt concentration using a difference-in-differences methodology. Based on empirical tests with data from China's A-share listed companies from 2003 to 2011, the results indicate that corporate debt concentration significantly increased following the implementation of the Property Law. This conclusion remains robust across a series of robustness tests. Mechanism analysis reveals that the Property Law influences debt concentration by affecting corporate bankruptcy risk, liquidation value, and information asymmetry. Further research demonstrates that the effect of the Property Law on increasing firms’ debt concentration is more pronounced among samples characterised by higher industry concentration in the external environment and lower levels of both internal and external governance. By analysing the reasons behind corporate debt concentration from the perspective of the Property Law, this study provides empirical evidence for understanding corporate debt concentration and examines the economic consequences of the law's implementation. The findings offer valuable policy recommendations for optimising related institutional frameworks.