Discussion Paper

No. 2014-5 | January 30, 2014
The Inner Structure of Pyramid and Capital Structure: Evidence from China

Abstract

This paper examines the relationship between capital structure and the inner structure of pyramid in an emerging market economy country. The author uses firm-level panel data of Chinese listed companies to analyze the influence of the inner structure of pyramid on capital structure and the differences between different institutional environments of that influence deeply. His results show that the longer the layers of pyramid structure, the stronger the “leverage effect” of pyramid structure, as well as the ultimate controllers' motivation to expand debt financing will be. So the layers of pyramid structure have a significantly positive effect on capital structure. However, the chains of pyramid structure have no significant effects on capital structure. Compared with the areas with poor institutional environment, in the areas with better institutional environment, the effects of the layers of pyramid structure on corporate capital structure is relatively small.

Data Set

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The data set for this article can be found at: http://dx.doi.org/10.7910/DVN/24564

JEL Classification

G32 G38 M48

Cite As

Kun Su (2014). The Inner Structure of Pyramid and Capital Structure: Evidence from China. Economics Discussion Papers, No 2014-5, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2014-5

Assessment



Comments and Questions


Abdul waheed - comment
January 31, 2014 - 05:33

Interesting


kun su - Thanks for professor Abdul waheed's positive comment
April 17, 2014 - 14:53

Thanks for professor Abdul waheed's positive comment


Anonymous - Referee Report 1
March 13, 2014 - 08:04

see attached file


kun su - reply to referee 1
June 17, 2014 - 10:35

Anonymous - Referee Report 2
March 24, 2014 - 11:28

see attached file


kun su - reply to referee 2
June 17, 2014 - 10:36