The Effect of Macro-Level Social Capital on Firms' Capital Structure: Empirical Evidence from Panel Data in China

This paper empiricially studies the impact of macro-level social capital on corporate capital structure and measures the social capital of Chinese 30 provinces through the index of Commercial Credit Environment, the index of citizen participation, the number of social organizations and the number of social welfare enterprises. The results indicate that the social capital do affect capital structure remarkably and positively through mechanism of trust. More specifically, listed firms in the better social capital development areas will incline to have higher debt ratio.