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Determinants of the guarantee circles : the case of Chinese listed firms.

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Determinants of the guarantee circles : the case of Chinese listed firms.

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dc.contributor.author Jian, Ming.
dc.contributor.author Xu, Ming.
dc.date.accessioned 2012-08-22T09:16:33Z
dc.date.available 2012-08-22T09:16:33Z
dc.date.copyright 2011
dc.date.issued 2012-08-22
dc.identifier.citation Jian, M., & Xu, M. (2012). Determinants of the guarantee circles: the case of Chinese listed firms. Pacific-Basin Finance Journal, 20(1), 78–100.
dc.identifier.uri http://hdl.handle.net/10220/8416
dc.description.abstract China's external capital market has been developing rapidly since the establishment of its stock markets. However, financing from the internal capital market, especially through the guarantee system provided by other associated firms (the guarantee circle), remains significant for some Chinese firms. We analyze the importance associated with the guarantee system in China with a focus on the macro and micro determinants that affect Chinese firms' participation in the guarantee circle. Our findings suggest that both macroeconomic and microeconomic factors have significant impact on a firm's involvement in the guarantee circle. Firms in regions with higher economic growth, less developed banking system and worse legal protection are more likely to receive guarantee from firms associated with the controlling shareholders. On the other hand, firms controlled by the state are less likely to receive guarantee but more likely to provide guarantee, while firms with alternative financing sources are more likely to provide guarantee. Firms within a complex group with more pyramidal layers are more likely to get involved in the guarantee circle, either as a guarantor or a guarantee. Our findings have implications to general guarantee systems with the presence of agency and moral hazard problems.
dc.language.iso en
dc.relation.ispartofseries Pacific-basin finance journal
dc.rights © 2011 Elsevier B.V. This is the author created version of a work that has been peer reviewed and accepted for publication by Pacific-Basin Finance Journal, Elsevier. It incorporates referee’s comments but changes resulting from the publishing process, such as copyediting, structural formatting, may not be reflected in this document. The published version is available at: [DOI: http://dx.doi.org/10.1016/j.pacfin.2011.07.001].
dc.subject DRNTU::Business.
dc.title Determinants of the guarantee circles : the case of Chinese listed firms.
dc.type Journal Article
dc.contributor.school College of Business (Nanyang Business School)
dc.identifier.doi http://dx.doi.org/10.1016/j.pacfin.2011.07.001
dc.identifier.rims 167613

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