TITLE:
Manager Characteristics and the Choice of Firm “Low Leverage”: Evidence from China
AUTHORS:
Yiping Chen, Xindong Zhang, Zhe Liu
KEYWORDS:
Capital Structure, Low-Leverage Puzzle, Manager, Risk-Aversion, Gender
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.4 No.10,
October
21,
2014
ABSTRACT: In this paper, we
analyze the low-leverage phenomenon of firms and examine the question of why
some firms have low leverage in China. We find Low-leverage firms are smaller,
have higher profitability and hold more cash balances than control firms chosen
by industry and size. Our evidence supports the hypothesis that these firms are
operated by risk-aversion manager. Firms with older Chief Executive Officer
(CEO) and higher first shareholder ownership are more likely to have low debt.
Also, CEO gender is one of the determinants of low-leverage choice.