Capital Structure Premium in Multinational SOEs: Evidence from China
Review of Development Economics, Vol. 20, Issue 1, pp. 283-293, 2016.
11 Pages Posted: 17 Oct 2015 Last revised: 13 Apr 2016
Date Written: October 15, 2015
Abstract
We investigate the relationship among multinational operation, ownership and capital structure using data from China’s A-share listed companies. We find that, in general, multinational enterprises (MNEs) have lower leverages than domestic enterprises (DEs). More importantly, we document a capital structure premium in China’s multinational state-owned enterprises (SOEs). Since the state supports multinational SOEs that promote overseas national strategy, these multinational SOEs will have higher credit availability and therefore higher debt-equity ratios. This study sheds light on government’s impact on firm’s creditability.
Keywords: Capital Structure; Multinational SOE; National Strategy
JEL Classification: D22, G32, G38
Suggested Citation: Suggested Citation