Business life cycle and capital structure: evidence from Chinese manufacturing firms

Lin Tian; Liang Han; Song Zhang

doi:10.1111/cwe.2015.23.issue-2

Business life cycle and capital structure: evidence from Chinese manufacturing firms

Lin Tian, Liang Han, Song Zhang

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Abstract

This paper uses a panel data-fixed effect approach and data collected from Chinese public manufacturing firms between 1999 and 2011 to investigate the impacts of business life cycle stages on capital structure. We find that cash flow patterns capture more information on business life cycle stages than firm age and have a stronger impact on capital structure decision-making. We also find that the adjustment speed of capital structure varies significantly across life cycle stages and that non-sequential transitions over life cycle stages play an important role in the determination of capital structure. Our study indicates that it is important for policy-makers to ensure that products and financial markets are well-balanced.

Original language	English
Pages (from-to)	22-39
Journal	China & World Economy
Volume	23
Issue number	2
DOIs	https://doi.org/10.1111/cwe.2015.23.issue-2
Publication status	Published - 1 Mar 2015

Keywords

capital structure
cash flow
life cycle
transition

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10.1111/cwe.2015.23.issue-2

ZHANG_2014_cright_CWE_Business Life Cycle and Capital Structure
This is the accepted version of the following article: Business Life Cycle and Capital Structure: Evidence from Chinese Manufacturing Firms, (2015), China and World Economy, 23(2), pp. 22-39, ISSN: 1671-2234, DOI: 10.1111/cwe.12105, which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/cwe.12105/abstract
Accepted author manuscript (Post-print), 259 KB

http://doi.wiley.com/10.1111/cwe.12105

Cite this

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title = "Business life cycle and capital structure: evidence from Chinese manufacturing firms",

abstract = "This paper uses a panel data-fixed effect approach and data collected from Chinese public manufacturing firms between 1999 and 2011 to investigate the impacts of business life cycle stages on capital structure. We find that cash flow patterns capture more information on business life cycle stages than firm age and have a stronger impact on capital structure decision-making. We also find that the adjustment speed of capital structure varies significantly across life cycle stages and that non-sequential transitions over life cycle stages play an important role in the determination of capital structure. Our study indicates that it is important for policy-makers to ensure that products and financial markets are well-balanced. ",

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Business life cycle and capital structure: evidence from Chinese manufacturing firms

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Keywords

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