An explanation of capital structure of China's listed property firms

Purpose– The purpose of this paper is to investigate the determinants of the capital structure of listed property firms in China.Design/methodology/approach– The study is based on quantitative methods such as dynamic panel data models and a panel data set containing financial and accounting data for all listed property companies from 2006 to 2010 in China.Findings– The findings confirm that the state-own shares, the fixed asset values, the total size of assets and profitability have a positive and significant impact on the leverage ratio of listed property firms in China. The negative impact of the tax shields and the currency ratio, and significant impact of state-own shares on capital structure cannot be explained by existing capital structure theory but the unique property market regulation environment and market conditions in China.Research limitations/implications– The findings confirm the applicability of trade-off theory (except for the correlation between leverage and the tax shield) on property companies in China. They also highlight the importance of government policies and special market conditions in explaining the financing behaviour of property companies in transaction countries like China.Practical implications– Complimentary policies should be established along with property market restriction policies to offset their unequal negative effect on property companies with less state-owned shares. Furthermore, government should invest efforts to eliminate the discrimination credit treatment of banks against property companies with non-existent or few state-owned shares.Originality/value– The special financial behaviour of China's property firms and the unique financial and property market conditions highlight the necessity of researching the capital structure of listed property firms in China. However, most of the existing literature focuses on the company financial behaviour in developed countries, and very few studies have been done concerning property firms’ financing behaviour in emerging economies such as China, and this research prospects to fill this blank.

Effects of milling time on powder packing characteristics and compressive mechanical properties of sintered Ti-10Nb-3Mo alloy

The influence of milling time on the powder packing characteristics and compressive mechanical properties of a biomedical Ti-10Nb-3Mo alloy (wt.%) was investigated. Ball milling was performed on elemental metal powders at different milling times of 0 (blended), 2, 4, 6, 8, and 10 h. This article demonstrates that despite the beneficial effects of ball milling technique in the mechanical alloying of the Ti-based alloy, the ball-milled powders synthesized at longer milling times can adversely affect the packing density and significantly diminish the compressive mechanical properties of the sintered powders. Crown

Determinants of corporate capital structure: a comparison of public and private firms

 This thesis investigates how capital structure decisions of private and public firms in the UK differ in regards to their ownership structure, information asymmetry (proxied by audit quality) and access to debt capital.

Situated learning in legal firms: a case study

Utilising the frame of communities of practice, this case study of a mid-tier legal firm revealed a tendency for newcomers to reproduce the knowledge of their supervisors. However, new knowledge was introduced frequently without disturbing power structures resulting in highly traditional organisations that also dealt easily with change and novelty.

Legal liability, government intervention, and auditor behavior : evidence from structural reform of audit firms in China

This paper investigates how legal liability influences audit quality and audit fees, particularly in the presence of government intervention. Since 2010, all Chinese audit firms were required to transform from a structure of limited liability company (LLC) to limited liability partnership (LLP), which removes the cap on the liability exposure of negligent auditors. By adopting this natural experiment, we document the following findings: first, after audit firms reorganize as LLPs, auditors are more likely to (1) issue modified audit opinions and going-concern opinions, (2) constrain clients’ earnings management, and (3) charge a premium in audit fees, which suggest that exerting unlimited legal liability on negligent auditors improves both audit quality and audit fees. Second, the effect of the LLP adoption is more pronounced when auditors are from local audit firms, and clients are controlled by local governments. Further analyses suggest that the stock prices of clients positively react to the reform event, which indicates that LLP adoption improves the overall value of audits. In summary, our empirical findings are consistent with the argument that legal liability is able to effectively shape auditor behavior in emerging markets where the other institutional mechanisms are relatively weaker and government intervention is heavy.

Corporate opacity and cost of debt for family firms

This paper uses a sample of Chinese firms to examine the impact of corporate opacity on the relationship between family control and firms’ cost of debt. We find that family control is associated with a lower cost of debt on average, and a negative impact exists mainly in firms with relatively low corporate opacity. We further provide evidence that the moderating effect of corporate opacity becomes more pronounced when investors’ perception of controlling families’ moral hazard of expropriation is higher. Our results are robust to alternative opacity proxies and controlling for endogeneity of family control using the instrumental variable method. Our study highlights that controlling families are heterogeneous in their impact on the shareholder–debtholder relationship in family firms, and debtholders view corporate opacity as an important reference in assessing the extent of potential agency conflicts in China.

Are firms with negative book equity in financial distress?

© 2015 World Scientific Publishing Co. and Center for Pacific Basin Business, Economics and Finance Research. This study examines whether negative book equity (BE) firms are in financial distress by analyzing their operating performance, financial characteristics, distress risk, and survivability when they first report negative BE. Firms with small magnitude of negative BE (SNBE firms) suffer from persistent negative earnings and financial distress, while firms with large magnitude of negative BE (LNBE firms) experience a temporary non-distress related earnings shock. LNBE firms report consecutive years of negative BE, but have lower distress risk and failure rate than both SNBE and control firms. However, all negative BE stocks have abysmal returns subsequent to their first report of negative BE.

The impact of perceived corporate social responsibility on organizational commitment and the moderating role of collectivism and masculinity: evidence from China

This study examines the relationship between employee perceptions of corporate social responsibility practices and their organizational commitment. Hierarchical regression analysis was utilized to analyze survey data on 280 employees from five export-oriented manufacturing firms in China. Employee perceptions of corporate social responsibility practices towards internal stakeholders were found to relate positively to their organizational commitment. In contrast, employee perceptions of corporate social responsibility practices to external stakeholders had a nonsignificant or marginally significant impact on organizational commitment. In addition, the collectivism and masculinity orientations of employees were found to moderate this relationship. These findings provide an insight into how corporate social responsibility practices may be utilized to motivate diverse groups of employees within China-based organizations. © 2013 Taylor & Francis.

How do cross-border mergers and acquisitions affect firms’ management and stakeholders? Part 2

The effect of mergers and acquisitions (M&A) on different stakeholders is dependent on a number of factors. These factors can include but are not limited to: the type of M&A; each firm's reasons for the M&A; the offer amount; the product market of both the acquirer and target firms; the political environment; the economic environment; and the current situation of each firm. Employees play a significant role in businesses in which employee satisfaction affects the quality and quantity of business output. Firms interested in embarking on cross-border mergers have new employees to manage and must determine an appropriate wage to match the level of productivity of target employees. Wages may need to be altered as a result of employee relocation; employee compensation can be a complex matter, as the cost of living in each area varies greatly.