The Determinants of Capital Structure: Consider The Influence of China's Non-tradable Share Reform

In this paper, we have analyzed the determinants of the capital structure of Chinese listed companies, especially, considered the non-tradable share reform to the influence of capital structure. The investigation has been performed using panel data procedure for a sample of 402 Chinese companies listed on the Shanghai Stock Exchange over the span from 2004 to 2006. The regression results show that, collateral value of asset, firm size, growth opportunity and reputation have positive and significant effects on leverage; profitability, liquidity, non-debt tax shields have negative and significant effects on leverage. These results are consistent with the hypotheses presented in the second section of the paper except growth opportunity on the leverage. According to the dummy variable, there is a differentiation in the capital structure before and after the non-tradable share reform for Chinese listed firms. We also find that Chinese listed firms tend to depend on short-term debt financing.