Relationship between Liabilities and Firm Performance of China’s Listed Media Companies
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Published:
Dec 27, 2019
Keywords:
firm performance liabilities media listed companies signalling theory
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Abstract
Based on financial data for Chinese listed media companies between 2011 and 2016, this paper examines the relationship between liability and corporate performance and offers a structural equation model of firm performance (media business). Results reveal that debt maturity structure, managerial shareholding, long-term liability, debt/tangible assets ratio and asset-liability ratio are all key factors in firm performance (media business). Additionally, it is found that debt/tangible assets ratio, asset-liability ratio and liability-equity ratio are associated with firm performance (overall business). This paper presents a structural equation model with four influencing paths related to firm performance (media business). It sets forth suggestions for improving firm performance (media business) and capital utilization with the requirement that business managers and policymakers foster better liability management and achieve debt structure optimization.
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References
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Ahmad, Z., Mohd, N., Abdullah, H., & Roslan, S. (2012). Capital structure effect on firm performance: focusing on consumers and industrials sectors on Malaysian firms. International Review of Business Research Papers, 8(5), 137-155.
Bryan, S., Hwang, L. S., & Lilien, S. (2000). CEO Stock-based compensation: an empirical analysis of incentive-intensity, relative mix, and economic determinants. Journal of Business, 73(4), 661–693.
Campello, M. (2006). Debt financing: Does it boost or hurt firm performance in product markets? Journal of Financial Economics, 82(1), 135-172.
Chathoth, P. K., & Olsen, M. D. (2007). The effect of environment risk, corporate strategy and capital structure on firm performance: an empirical investigation of restaurant firms. International Journal of Hospitality Management, 26(3), 502-516.
Cheng, Min-Tsung(2009). Relative effects of debt and equity on corporate operating performance: a quantile regression study. International Journal of Management, 26(2), 142-143.
Cho, M. H.(1998). Ownership structure, investment, and the corporate value: an empirical analysis. Journal of Financial Economics, 47(1), 103-121.
Cofer, C. N., & Appley, M. H. (1964). Motivation: Theory and research. Oxford, England: John Wiley.
Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling Theory: A Review and Assessment. Journal of Management, 37(1), 39–67.
Gabrijelcic, M., Herman, U., & Lenarcic, A. (2013). Debt financing and firm performance before and during the crisis: micro-financial evidence from Slovenia. Social Science Electronic Publishing.
Guo, S. H. (2012). Research on the theory of enterprise financing structure, Yunnan University Press, 10.
Huang, H. H., Wang, W., & Zhou, J. (2014). Shareholder rights, insider ownership and earnings management, A Journal of Accounting, Finance and Business Studies, 49(1), 46-73.
Hermalin, B. E., & Weisbach, M. S. (1991). The effects of board composition and direct Incentives on firm performance. Financial Management, 20(4), 101-112.
Kline, R. B. (2005). Principles and Practice of Structural Equation Modeling. Guilford Press.
Kraus, A., & Litzenberger, R. H. (1973). A state-preference model of optimal financial leverage. Journal of Finance, 28(4), 911-922.
Harris, M., & Raviv, A. (1988). Corporate control contests and capital structure, Journal of Financial Economics, 20(20), 55-86.
Hu, Y. M., Lin, W. X., Li, S. Q., Xie, S. L. (2008). The role of the great creditors: Do the banks in China have the monitoring effect on the borrowers? Economic Research Journal, (10), 52-64.
Menard, S. (2002). Applied Logistic Regression Analysis. California: Sage Publications Press.
Modigliani, F., & Miller, M. H. (1959). The cost of capital, corporation finance, and the theory of investment, American Economic Review, 48(3), 261-297.
Modigliani, F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: a correction. The American Economic Review, 53(3), 433-443.
Li, D. D., & Li, S. (1996). A theory of corporate scope and financial structure. The Journal of Finance, 51(2), 691-709.
Liu, H., Peng, Y. H., Zhang, J. (2010). Who can get a "credit loan"? Research on the relationship between loan property structure and accounting information quality, Finance & Trade Economics, (7), 26-34.
Pyle, D. H., & Leland, H. E. (1977). Information asymmetries, financial structure and financial intermediation. Journal of Finance, 32(2), 371-388.
Qian, Y. N. (2010). Research on current situation and countermeasures of Chinese media diversified investment, Press Circles, (2), 3-5.
Ross, S. A. (1977). The determination of financial structure: the incentive-signaling approach. Bell Journal of Economics, 8(1), 23-40.
Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87, 355–79.
Spence, M. (1974). Market Signaling: Informational Transfer in Hiring and Related Processes. Cambridge, MA: Harvard University Press.
Spence, M. (2002). Signaling in retrospect and the informational structure of markets. American Economic Review, 92, 434–59.
Yu, Q., Cheng, Y. (2001). The firm’s dividend policy and stock market fluctuation in China, Economic Research Journal, (4), 32-40.
Zambuto, F., Nigro, G. L., & O'Brien, J. P. (2015). The importance of alliances in firm capital structure decisions: evidence from biotechnology firms, Managerial and Decision Economics, 38(1), 3-18.
Zhang, Q., Chen, L., & Feng, T. (2014). Mediation or moderation? The role of R&D investment in the relationship between corporate governance and firm performance: empirical evidence from the Chinese IT industry. Corporate Governance: An International Review, 22(6), 501-517.
Zheng, R. M. (2004). Comparative analysis of financing structure between Chinese and foreign enterprises, Accounting Research, (7), 67-71.
Zhang, W. Y. (1995). An overview of contractual theory of corporate finance structure, Reform, (4), 109-116.
Zhang, Y. L., Lu, J. (2014). An analysis of influencing factors of capital structure of Media Listed Companies, Economics and Management Strategies Journal, (03), 99-111.