Business, Management and Accounting
3 years ago

China's Construction Companies Face High Debt Due to Interest Rates

JAAF (Journal of Applied Accounting and Finance)
The Determinants of Capital Structure on China-Listed Construction Companies
Chandra Setiawan, Qu Yumeng

Paper Summary

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Construction companies in China have higher debt levels compared to other countries, prompting a study on the factors influencing their capital structure. The researchers analyzed data from 10 listed construction companies over 2012-2019, finding that profitability, asset tangibility, firm size, growth opportunities, and interest rates significantly impact capital structure. Non-debt tax shield and inflation rate did not show significant effects. The study suggests ways to optimize companies' capital structures.