Applicability of financial theories of capital structure to the Chinese cultural context: A study of privately owned SMEs

Alexander Harry Newman, Sailesh Gunessee, Brian J Hilton

Research output: Contribution to journalArticleResearchpeer-review

52 Citations (Scopus)


Using a new dataset of 1539 Chinese small and medium-sized enterprises this article investigates the firm-level determinants of capital structure and tests them against the predictions of financial theory. Firm size and profitability are both found to be related to leverage as posited by pecking-order theory. In contrast little support is found for the predicted relationship between asset structure and leverage. These findings are discussed in relationship to their Chinese cultural context. The managerial and policy implications of the research are then explored.
Original languageEnglish
Pages (from-to)65 - 83
Number of pages19
JournalInternational Small Business Journal
Issue number1
Publication statusPublished - 2012
Externally publishedYes

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