Corporate Governance and Collateral Requirements: Evidence from China's Listed Firms

58 Pages Posted: 1 Feb 2014

See all articles by Can An

Can An

University of Wollongong

Gary Gang Tian

Macquarie University - Department of Applied Finance and Actuarial Studies; Macquarie University, Macquarie Business School

Xiaofei Pan

University of Wollongong

Date Written: January 30, 2014

Abstract

Using a sample of China’s listed firms during 2007-2009, we examine the effect of internal and external corporate governance mechanisms on collateral requirements of bank loans. We find that governance of foreign shareholders, other large shareholders and the two-tier boards affect collateral requirements. In addition, our result indicates the effect of internal governance on collateral requirements dependents on the type of dominant shareholder. We also find evidence that higher-quality institutions help to reduce the collateral requirements. Overall, our research takes the governance issues into the general determinants of collateral which has important policy implications for governance reform in China’s ever-growing markets.

Keywords: Collateral; Corporate governance; Marketisation

JEL Classification: G21; G34

Suggested Citation

An, Can and Tian, Gary Gang and Pan, Xiaofei, Corporate Governance and Collateral Requirements: Evidence from China's Listed Firms (January 30, 2014). 2014 Financial Markets & Corporate Governance Conference, Available at SSRN: https://ssrn.com/abstract=2388484 or http://dx.doi.org/10.2139/ssrn.2388484

Can An (Contact Author)

University of Wollongong ( email )

Northfields Avenue
Wollongong, New South Wales 2522
Australia

Gary Gang Tian

Macquarie University - Department of Applied Finance and Actuarial Studies ( email )

Room 513, Building E4A
North Ryde, NSW, 2109
Australia

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Xiaofei Pan

University of Wollongong ( email )

Wollongong, New South Wales 2500
Australia

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