Robust and fragile firm-specific determinants of the capital structure of Chinese firms

摘要

We demonstrate, using Extreme Bounds Analysis (EBA), that some of the firm-specific determinants of the capital structure of Chinese firms reported as important in previous studies may be fragile, in the sense that the sign and/or significance of the coefficients on these variables change depending on model specification (the variables included in or excluded from the model). For this purpose, data on 344 publicly listed shareholding companies are used, covering nine potential firm-specific determinants of capital structure. The robust variables, whose coefficients remain significant and of the same sign irrespective of model specification, turn out to be size, liquidity, profitability and growth opportunities. Although conventional cross-sectional analysis would lend support to the importance of tangibility and stock price performance, these two variables are indeed fragile. Other variables turn out to be insignificant.