Capital structure of Chinese listed SMEs: an agency theory perspective

Wei Huang*, Agyenim Boateng, Alexander Newman

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    47 Citations (Scopus)
    322 Downloads (Pure)


    Prior work examining the antecedents of capital structure for small and medium-sized enterprises in emerging markets is limited. This paper sheds light on how the corporate governance mechanisms adopted by firms on the newly established Growth Enterprise Market (GEM) in China influence their use of debt. We find that the financial leverage of GEM firms is positively influenced by executives’ shareholding and their excess cash compensation. Ownership concentration appears to reduce leverage, whereas the percentage of tradable shares increases leverage. In contrast, institutional investors’ shareholding does not influence the level of debt. Traditional factors such as tax and operating cash flow are insignificant in explaining the debt levels among GEM firms.
    Original languageEnglish
    Pages (from-to)535-550
    Number of pages16
    JournalSmall Business Economics
    Issue number2
    Early online date2 May 2016
    Publication statusPublished - Aug 2016


    • capital structure
    • executive compensation
    • ownership structure
    • SMEs
    • China


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