As for the long-term debt ratios of the Taiwanese firms, the ratio of profits to the equity (ROE) is found to be positively effective--contradictory to the negatively hypothesized relation, while it is negatively effective on both short and total debt ratios.
Briefly, the test results for the developed country context show that the model works best for the explanation of the drivers of the total and long-term debt ratios.
Prior to their bankruptcies, the sample firms have significantly lower operating margins and cash balances, lower market-to-book ratios, higher nondebt tax shields (net operating loss carryforward), higher short- and long-term debt ratios, and substantially higher total debt ratios than their respective industry norms.
Although Chapter 11 firms materially reduce short-term debt while in court, long-term debt ratios and total debt ratios remain significantly higher than industry medians.
Tables III and IV report results from regressing long-term debt ratios and total debt ratios, respectively, against the book value of assets; the industry median ratio of market value of assets to book value of assets; operating income scaled by assets; net property, plant, and equipment scaled by assets; and net operating loss carryforward (NOLC) scaled by assets.
16) We estimated an additional model (untabulated) where we replaced the short-term debt and long-term debt ratios with the total debt ratio.
Regressions of Long-Term Debt Ratios This table presents regressions of long-term debt scaled by assets for the sample firms before they file for Chapter 11 and after they have emerged.
Although industry membership is important, the development and growth of the stock market did not affect the long-term debt ratios over the years.
How does the concentrated and nontradable (diffused and tradable) ownership by the State and legal-person shareholders (domestic individual investors) influence the listed Chinese firms' long-term debt ratios, respectively?
First, our data make it possible for us to directly test the monitoring role of various categories of ownership structures, with different monitoring abilities and legal rights, on sample firms' long-term debt ratios in an environment without a significant external corporate control market.
Therefore, we hypothesize that EPFs will have lower long-term debt ratios than will SOEs.
Given these nonformalized, but culturally strongly enforced factors, we hypothesize a positive or nonsignificant relation between these ownership positions and EPFs' long-term debt ratios.