Abstract

This paper studies the determinants of gearing of 558 Chinese listed
companies between 2007 and 2012. The Least Square Dummy Variable
(LSDV) model is employed to investigate the influence of related variables on
gearing. Explanatory variables include: profitability, size, growth
opportunity, tangibility, liquidity, non-debt tax shield, percentage of tradable
shares, proportion of top ten share- holders holding, tax rate and uniqueness
while controlling for firm factors and industry effects. Two measures are used
to measure gearing: total debt ratio and long-term debt ratio. Our results have
interesting implications for corporate capital structure on other fast developing
nations as well.