Author(s)

Yiping Chen, Xindong Zhang, Zhe Liu

School of Economic and Management, Shanxi University, Taiyuan, China.

In this paper, we analyze the low-leverage phenomenon of firms and examine the question of why some firms have low leverage in China. We find Low-leverage firms are smaller, have higher profitability and hold more cash balances than control firms chosen by industry and size. Our evidence supports the hypothesis that these firms are operated by risk-aversion manager. Firms with older Chief Executive Officer (CEO) and higher first shareholder ownership are more likely to have low debt. Also, CEO gender is one of the determinants of low-leverage choice.

Capital Structure, Low-Leverage Puzzle, Manager, Risk-Aversion, Gender

Chen, Y. , Zhang, X. and Liu, Z. (2014) Manager Characteristics and the Choice of Firm “Low Leverage”: Evidence from China. American Journal of Industrial and Business Management, 4, 573-584. doi: 10.4236/ajibm.2014.410062.