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Firm leverage and the private benefits of control in Chinese firms

Author

Listed:
  • Zhang Zhaoguo
  • He Weifeng
  • Chen Jing

Abstract

This study investigates the relationship between capital structure and the private benefits of control of listed Chinese firms. A sample of firms listed on the Chinese stock markets is used to estimate the private benefits of control. The private benefits of control are approximately 18% (on average) in China. There is a statistically significant negative relationship between Short-Term Debt (STD) and the private benefits of control. In addition, a positive relationship exists between Long-Term Debt (LTD) and the private benefits of control. Finally, a statistically significant negative relationship exists between total debt and the private benefits of control.

Suggested Citation

  • Zhang Zhaoguo & He Weifeng & Chen Jing, 2008. "Firm leverage and the private benefits of control in Chinese firms," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 1(1), pages 6-16.
  • Handle: RePEc:ids:afasfa:v:1:y:2008:i:1:p:6-16
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