Investigating the determinants of capital leverage: The case of China's real estate sector
International Journal of Economics and Business Research, cilt.20, sa.3, ss.288-309, 2020 (Scopus)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 20 Sayı: 3
- Basım Tarihi: 2020
- Doi Numarası: 10.1504/ijebr.2020.110437
- Dergi Adı: International Journal of Economics and Business Research
- Derginin Tarandığı İndeksler: Scopus, EconLit, INSPEC
- Sayfa Sayıları: ss.288-309
- Anahtar Kelimeler: Capital structure, Chinese firms, Leverage, Picking order theory, Real estate sector, SEM, Structural equation modelling, Trade-off theory
- Ankara Hacı Bayram Veli Üniversitesi Adresli: Evet
Özet
Copyright © 2020 Inderscience Enterprises Ltd.This study empirically investigated the determinants of capital leverage of the Chinese real estate sector. Annual panel data of 130 companies covering the period 2007-2017 were used. Profitability was treated as a latent variable to avoid any specification error. Structural equation modelling (SEM) confirmed that while the size and financial cost have a significant positive effect on the level of capital leverage; liquidity, tangibility, and non-debt tax shield (NTDS) have a significant negative effect. The findings provide supportive evidence for both the trade-off theory and the pecking order theory. An interesting outcome of our research is that despite the substantial difference in institutional structure between China and Western countries, the firm-specific determinants of leverage are partially similar between the two. The policy implications of our research are discussed in the conclusion section.