State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China

Dehong Wang

doi:doi:10.11648/j.jfa.20170504.16

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State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China

Dehong Wang

Published in Journal of Finance and Accounting (Volume 5, Issue 4)

Received: 10 March 2017 Accepted: 28 April 2017 Published: 6 July 2017

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Abstract

We examine the impacts of governmental intervention on firms’ leverages ratios based on Chinese state-owned enterprises (SOEs) from 1998 to 2016. Research finds: 1) Governmental intervention is positively correlated with SOEs’ leverage ratios, and this relationship is more notable when there are higher levels of governmental intervention; 2) SOEs’ leverage ratios are negatively correlated with actual tax rates, and this relationship is more noteworthy for more profitable SOEs. These results also indicate: 1) In transitional countries such as China, government may serve as an important factor in firms’ financing decisions. Firms can raise leverage ratios to escalate their bargaining powers with government and resist loss from governmental intervention; 2) SOEs may use debt as a tool to reduce their tax burdens in this way.

Published in	Journal of Finance and Accounting (Volume 5, Issue 4)
DOI	10.11648/j.jfa.20170504.16
Page(s)	159-164
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

State-Owned Enterprise, Debt Tool, Governmental Intervention

References

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Dehong Wang. (2017). State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China. Journal of Finance and Accounting, 5(4), 159-164. https://doi.org/10.11648/j.jfa.20170504.16

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ACS Style

Dehong Wang. State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China. J. Finance Account. 2017, 5(4), 159-164. doi: 10.11648/j.jfa.20170504.16

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AMA Style

Dehong Wang. State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China. J Finance Account. 2017;5(4):159-164. doi: 10.11648/j.jfa.20170504.16

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@article{10.11648/j.jfa.20170504.16,
  author = {Dehong Wang},
  title = {State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China},
  journal = {Journal of Finance and Accounting},
  volume = {5},
  number = {4},
  pages = {159-164},
  doi = {10.11648/j.jfa.20170504.16},
  url = {https://doi.org/10.11648/j.jfa.20170504.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20170504.16},
  abstract = {We examine the impacts of governmental intervention on firms’ leverages ratios based on Chinese state-owned enterprises (SOEs) from 1998 to 2016. Research finds: 1) Governmental intervention is positively correlated with SOEs’ leverage ratios, and this relationship is more notable when there are higher levels of governmental intervention; 2) SOEs’ leverage ratios are negatively correlated with actual tax rates, and this relationship is more noteworthy for more profitable SOEs. These results also indicate: 1) In transitional countries such as China, government may serve as an important factor in firms’ financing decisions. Firms can raise leverage ratios to escalate their bargaining powers with government and resist loss from governmental intervention; 2) SOEs may use debt as a tool to reduce their tax burdens in this way.},
 year = {2017}
}

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TY  - JOUR
T1  - State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China
AU  - Dehong Wang
Y1  - 2017/07/06
PY  - 2017
N1  - https://doi.org/10.11648/j.jfa.20170504.16
DO  - 10.11648/j.jfa.20170504.16
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 159
EP  - 164
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20170504.16
AB  - We examine the impacts of governmental intervention on firms’ leverages ratios based on Chinese state-owned enterprises (SOEs) from 1998 to 2016. Research finds: 1) Governmental intervention is positively correlated with SOEs’ leverage ratios, and this relationship is more notable when there are higher levels of governmental intervention; 2) SOEs’ leverage ratios are negatively correlated with actual tax rates, and this relationship is more noteworthy for more profitable SOEs. These results also indicate: 1) In transitional countries such as China, government may serve as an important factor in firms’ financing decisions. Firms can raise leverage ratios to escalate their bargaining powers with government and resist loss from governmental intervention; 2) SOEs may use debt as a tool to reduce their tax burdens in this way.
VL  - 5
IS  - 4
ER  -

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Author Information

Dehong Wang

International Business School, Beijing Foreign Studies University, Beijing, P. R. China

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APA Style

Dehong Wang. (2017). State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China. Journal of Finance and Accounting, 5(4), 159-164. https://doi.org/10.11648/j.jfa.20170504.16

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ACS Style

Dehong Wang. State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China. J. Finance Account. 2017, 5(4), 159-164. doi: 10.11648/j.jfa.20170504.16

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AMA Style

Dehong Wang. State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China. J Finance Account. 2017;5(4):159-164. doi: 10.11648/j.jfa.20170504.16

Copy | Download

@article{10.11648/j.jfa.20170504.16,
  author = {Dehong Wang},
  title = {State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China},
  journal = {Journal of Finance and Accounting},
  volume = {5},
  number = {4},
  pages = {159-164},
  doi = {10.11648/j.jfa.20170504.16},
  url = {https://doi.org/10.11648/j.jfa.20170504.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20170504.16},
  abstract = {We examine the impacts of governmental intervention on firms’ leverages ratios based on Chinese state-owned enterprises (SOEs) from 1998 to 2016. Research finds: 1) Governmental intervention is positively correlated with SOEs’ leverage ratios, and this relationship is more notable when there are higher levels of governmental intervention; 2) SOEs’ leverage ratios are negatively correlated with actual tax rates, and this relationship is more noteworthy for more profitable SOEs. These results also indicate: 1) In transitional countries such as China, government may serve as an important factor in firms’ financing decisions. Firms can raise leverage ratios to escalate their bargaining powers with government and resist loss from governmental intervention; 2) SOEs may use debt as a tool to reduce their tax burdens in this way.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - State-Owned Enterprise: Debts as Tools and Governmental Intervention – Evidence from China
AU  - Dehong Wang
Y1  - 2017/07/06
PY  - 2017
N1  - https://doi.org/10.11648/j.jfa.20170504.16
DO  - 10.11648/j.jfa.20170504.16
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 159
EP  - 164
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20170504.16
AB  - We examine the impacts of governmental intervention on firms’ leverages ratios based on Chinese state-owned enterprises (SOEs) from 1998 to 2016. Research finds: 1) Governmental intervention is positively correlated with SOEs’ leverage ratios, and this relationship is more notable when there are higher levels of governmental intervention; 2) SOEs’ leverage ratios are negatively correlated with actual tax rates, and this relationship is more noteworthy for more profitable SOEs. These results also indicate: 1) In transitional countries such as China, government may serve as an important factor in firms’ financing decisions. Firms can raise leverage ratios to escalate their bargaining powers with government and resist loss from governmental intervention; 2) SOEs may use debt as a tool to reduce their tax burdens in this way.
VL  - 5
IS  - 4
ER  -

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