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Mathematical Problems in Engineering
Volume 2016 (2016), Article ID 8921418, 12 pages
http://dx.doi.org/10.1155/2016/8921418
Review Article

Research of Microcosmic Affection Factors on Capital Misallocation: A Case of Chinese Listed Companies

1School of Finance, Zhejiang University of Finance & Economics, Hangzhou 310018, China
2China Academy of Financial Research (CAFR), Zhejiang University of Finance & Economics, Hangzhou 310018, China

Received 15 April 2016; Accepted 19 July 2016

Academic Editor: Xiaodong Lin

Copyright © 2016 Zhefan Piao et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

With the restrictions of equity financing of Chinese listed companies, debt dimensions are increasing, and the issue of corporate financial structure and financing constraints influence on capital misallocation has become an important practical problem which Chinese listed companies face. This paper is concerned with a model about capital misallocation and its influencing factors of integrated financing, capital operation, and investment performance. We take 7096 observations of 646 Chinese listed companies during fiscal years 2003 to 2014 for A-shares on the Shanghai and Shenzhen stock exchange, for instance, to empirically test the microscopic influencing factors of capital misallocation under different external financing dependence. The study illustrates the following: (1) in descriptive statistics of different industries capital misallocation, more than half of firms experience the circumstance of capital misallocation; (2) although Chinese listed companies are faced with financing constraints, capital market inefficiency, and other issues, most companies still depend on external financing; (3) the main factors that affect capital misallocation of the listed companies are financial liquidity and financial pledgeability; (4) the firms with high innovation abilities generally have stronger profitability, superior financial liquidity, and better financial pledgeability, thus reducing corporate capital misallocation; (5) the Chinese listed companies with large-scale assets and strong profitability easily obtain bank loans and equity financing, while violating the principle of assets matching.