Noncontrolling large shareholders and short-term debt for long-term investment

This study empirically examines the impact of noncontrolling large shareholders (NCLSs) on short-term debt for long-term investment (SDFLI) using a sample of Chinese A-share firms listed on the Shanghai and Shenzhen Stock Exchanges from 2005 to 2021. The findings suggest that NCLSs reduce the level of SDFLI; however, asset collateralizability mitigates the negative relationship between NCLSs and SDFLI. Conversely, stock liquidity reinforces the governance effect of NCLSs in mitigating SDFLI. The mechanism analysis suggests that improving agency efficiency is an important channel through which NCLSs influence SDFLI. This study deepens the understanding of the factors driving the SDFLI of listed Chinese firms and provides insights into how to mitigate this problem. Additionally, it provides empirical support for the governance role NCLSs play in listed firms.