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Ownership control and debt maturity structure: Evidence from China

Ruan, W., Cullen, G., Ma, S. and Xiang, E. (2014) Ownership control and debt maturity structure: Evidence from China. International Journal of Managerial Finance, 10 (3). pp. 385-403.

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Abstract

We examine the debt maturity structure of Chinese listed companies during a period when the bond market was under-developed and the majority of commercial banks were owned by the state. We find that the type of ownership control affects the debt maturity structure. Compared to privately controlled enterprises, state-controlled companies had greater access to long-term debt and used less short-term debt during the sample period 2001–2008. The empirical results also show that company profitability was an important concern when Chinese banks allocated loans to listed companies, which meant that they became de facto monitors of listed companies during China’s transition process. However, although the financial reform process has increased the motivation of banks to consider company profitability in their lending decisions, the effect of profitability on the debt maturity structure is confounded because of state ownership being a big weight in bank lending decision.

Publication Type: Journal Article
Murdoch Affiliation: School of Management and Governance
Publisher: Emerald
Copyright: Emerald
URI: http://researchrepository.murdoch.edu.au/id/eprint/22916
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