Corporate Governance, Firm Age, and Leverage: Empirical Evidence from China

Abstract

This study aims to analyze the influence of corporate governance on firm leverage. It also investigates the moderating effect of firm age on the association between corporate governance and leverage. Using a sample of Chinese listed firms, it addresses several issues that have been identified in the prior literature regarding capital structure. This study provides novel findings which reveal that CEO duality and board commissions have a statistically significant role in determining the leverage levels for NSOEs, however, the positive effect of board commissions established on leverage decreases as the firm ages. Board size, board independence and supervisory boards influence the leverage levels for SOEs, however, the negative effects of board independence and supervisory boards on leverage reduce as the firm grows older.

Keywords: Corporate governance, leverage, firm age, Chinese listed firms

DOI: 10.7176/RJFA/10-2-03