Ownership control and debt maturity structure: evidence from China
Abstract
Purpose
The authors examine the debt maturity structure of Chinese listed companies during the period when bond market was under-developed and the majority of commercial banks were owned by the state. The purpose of this paper is to answer why and how the different ownership control types impact the firms’ preference and accessibility to either long- or short-term debts.
Design/methodology/approach
The univariate analysis was used to test the differences of debt maturity choices for firms grouped by ownership control types, profitability and institutional development. Then, logit regression and ordinary least squares regression were applied to examine the determinants of ownership control types in debt maturity structures.
Findings
Compared to privately controlled firms, state-owned enterprises had greater access to long-term debt and used less short-term debt during the sample period. Evidences also indicate that the on-going financial reform has increased the motivation of banks to consider company profitability in their lending decisions. However, state-owned banks still discriminate private firms in allocation of financial resources, particular in less-developed regions.
Research limitations/implications
Due to the research scope and data limitations, the authors cannot take some factors into consideration, such as collateral, guarantee, credit ranking, financing agreement and leasing obligation.
Originality/value
This study extends the existing literature in three ways. First, the authors investigate the bank discrimination problem into the loan term structure. Second, the authors recognise the effect of financial reform on alleviation in bank discrimination problem. Finally, the authors take the consideration of institutional development of firms’ location areas in their analyses.
Keywords
Acknowledgements
JEL Classifications — G18, G21, G32, G38
The authors would like to thank the participants at the 18th Annual Meeting of the Multinational Financial Society (Roma, 2011) and at the 4th Biennial Conference on Transition and Economic Development (Shanghai, 2012) for their helpful suggestions. The authors are grateful to the anonymous reviewers’ constructive comments. The authors also acknowledge the supportive advice from the editor, Professor David Michayluk. The authors retain responsibility for errors.
Citation
Ruan, W., Cullen, G., Ma, S. and Xiang, E. (2014), "Ownership control and debt maturity structure: evidence from China", International Journal of Managerial Finance, Vol. 10 No. 3, pp. 385-403. https://doi.org/10.1108/IJMF-06-2013-0064
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited