Complex ownership, contract enforcement, creditor rights, and leverage

ABSTRACT

This study examines the moderating effect of judicial efficiency and creditor rights on the relationship between internal pyramid structure and leverage. The results suggest that the effect of the vertical and horizontal pyramid structures on leverage is positive and significant. We find that the impact of the pyramid’s vertical structure on leverage is more substantial than that of the horizontal structure. The results also reveal that judicial efficiency and creditor rights weaken the association between a complex ownership structure and leverage.

KEYWORDS:

• Control layers
• control chains
• judicial efficiency
• creditor legal rights
• leverage

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. To check for correlation among the variables, we used the VIF test. It measures multicollinearity in the regression coefficient by measuring inflation of variance. The values of individual VIF and mean VIF are less than 10, which indicates that there is no issue of multicollinearity. As a yardstick, a VIF of 10 or more suggests that multicollinearity exists.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [71772154,72072049]; Zhejiang Key Program for Emerging & Interdisciplinary Research [21XXJC03ZD].