Capital structure and financial performance in China's agricultural sector: a panel data analysis

摘要

The objective of this paper is to investigate the role of capital structure in financial performance of Chinese agricultural listed companies from 2013 to 2019. This paper also explores whether company ownership and location influence this relationship. Financial performance is measured by return on assets (ROA) and return on equity (ROE), and the ratios of total debt, short-term debt, and long-term debt are used to measure capital structure. The panel regression estimation technique is applied for analysis purpose. The empirical results reveal that total debt ratio and short-term debt ratio have a negative impact on financial performance of Chinese agricultural listed companies, while long-term debt ratio has no significant impact on ROA and ROE. In addition, the impact of capital structure on financial performance in private-owned companies is higher than that in state-owned companies. The degree of negative impact of total debt on financial performance is higher for companies in central and western regions compared to companies in eastern region. The findings might provide some new insights for corporate managers to optimize capital structure and induce financial performance in emerging markets.