Applicability of financial theories of capital structure to the Chinese cultural context: A study of privately owned SMEs

Alexander Newman, Sailesh Gunessee, Brian Hilton

    Research output: Journal PublicationArticlepeer-review

    48 Citations (Scopus)

    Abstract

    Using a new dataset of 1539 Chinese small and medium-sized enterprises this article investigates the firm-level determinants of capital structure and tests them against the predictions of financial theory. Firm size and profitability are both found to be related to leverage as posited by pecking-order theory. In contrast little support is found for the predicted relationship between asset structure and leverage. These findings are discussed in relationship to their Chinese cultural context. The managerial and policy implications of the research are then explored.

    Original languageEnglish
    Pages (from-to)65-83
    Number of pages19
    JournalInternational Small Business Journal
    Volume30
    Issue number1
    DOIs
    Publication statusPublished - Feb 2012

    Keywords

    • SMEs
    • capital structure
    • financing
    • pecking-order theory

    ASJC Scopus subject areas

    • Business and International Management

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