The determinants behind Chinese companies’ incremental equity issue decisions

Chen, Xiaoyan (2014) The determinants behind Chinese companies’ incremental equity issue decisions. Australian Journal of Management, 40 4: 701-723. doi:10.1177/0312896214535614


Author Chen, Xiaoyan
Title The determinants behind Chinese companies’ incremental equity issue decisions
Journal name Australian Journal of Management   Check publisher's open access policy
ISSN 0312-8962
1327-2020
Publication date 2014-09-24
Year available 2014
Sub-type Article (original research)
DOI 10.1177/0312896214535614
Open Access Status
Volume 40
Issue 4
Start page 701
End page 723
Total pages 23
Place of publication London, United Kingdom
Publisher Sage Publications
Collection year 2015
Language eng
Abstract This paper studies the determinants behind Chinese companies’ decisions to make seasoned equity offerings (SEO). Probit regressions are employed and a Monte Carlo simulation method is used to confirm the non-existence of the spurious correlation problem found in traditional models of capital structure. Evidence is found to confirm the privilege of state-controlled enterprises to access equity. A corporate governance indicator based on the completion of the Split Share Structure Reform is also introduced. However, no evidence to support the importance of corporate governance is found. The results of this study imply that in a country where the state dominates the intermediation of capital, investors and thus companies are less sensitive to the quality of corporate governance. Different factors have been observed to affect Chinese firms’ SEO decisions prior to and post the Split Share Structure Reform. The influence from the state has also been weakened after the reform, particularly after the global financial crisis.
Keyword China
Corporate governance
Seasoned equity offering
Split Share Structure Reform
Spurious correlation problem
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Published online ahead of print, September 24 2014

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2015 Collection
UQ Business School Publications
 
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Created: Thu, 29 Jan 2015, 14:17:40 EST by Karen Morgan on behalf of UQ Business School