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Economic policy uncertainty and capital structure choice: evidence from China


Zhang, G and Han, J and Pan, Z and Huang, H, Economic policy uncertainty and capital structure choice: evidence from China, Economic Systems, 39, (3) pp. 439-457. ISSN 0939-3625 (2015) [Refereed Article]

Copyright Statement

Copyright 2015 Elsevier B.V.

DOI: doi:10.1016/j.ecosys.2015.06.003


This paper studies how economic policy uncertainty affects corporate capital structure for Chinese listed firms from 2003 to 2013.We show that as the degree of economic policy uncertainty increases, firms tend to lower their leverage ratios. However, firms that are from regions with lower degrees of marketization, are state-owned or have prior bank-firm relationships mitigate the negative effect of policy uncertainty. Moreover, we provide consistent evidence that this negative effect is sourced from the deterioration of the external financing environment. We also find that firms adjust their financing structures by using more trade credit when economic policy uncertainty increases. Our results are robust to sample selection, data frequency, model specification and endogeneity

Item Details

Item Type:Refereed Article
Keywords:economic policy uncertainty, capital structure, trade credit, China
Research Division:Commerce, Management, Tourism and Services
Research Group:Banking, finance and investment
Research Field:Finance
Objective Division:Commercial Services and Tourism
Objective Group:Financial services
Objective Field:Finance services
UTAS Author:Han, J (Mr Jianlei Han)
ID Code:118518
Year Published:2015
Web of Science® Times Cited:106
Deposited By:TSBE
Deposited On:2017-07-13
Last Modified:2017-08-28

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