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Presence of Foreign Firms and the Firm Capital Structure: Evidence from China’s Manufacturing Sector
Conference paper   Open access   Peer reviewed

Presence of Foreign Firms and the Firm Capital Structure: Evidence from China’s Manufacturing Sector

Sajid Anwar and S Sun
Proceedings of the 42nd Australian Conference of Economists, pp.1-23
Australian Conference of Economists (ACE): Beyond the Frontiers: New Directions in Economics, 42nd (Perth, Australia, 07-Jul-2013–10-Jul-2013)
Murdoch University
2013
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Abstract

Applied Economics Panel Data Analysis foreign direct investment capital structure China
This paper argues that there is a link between foreign presence and the leverage of domestic firms. This link is empirically evaluated by using firm level panel data from China. The empirical estimation based on (i) the Tobit and (ii) the Instrumental Variable Tobit regression reveals that, in overall terms, the impact of foreign presence on the leverage of domestic firms in China's manufacturing sector is negative. We find that the negative impact on the leverage of privately owned firms is relatively large. We expect the impact of foreign presence on the leverage of domestic firms to vary from industry to industry.

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