Multinational corporation VS Domestic firms. Do MNCs have a lower level of leverage? An empirical study in China and Germany

This paper examines the leverage policies of multinational corporations (MNCs) in comparison to those of domestic corporations (DCs). In the literature there is still an open debate on whether the level of leverage decrease with the degree of internationality. A recent study by Park, Suh, & Yeung (2013) document that, over the period 1981-2010, the leverage levels of MNCs in the US and 6 other European developed economies are not significantly lower than those of the DCs. Following partly their modus operandi I extended the analysis to a developing countries such as China, as well as comparing it with the case of Germany (using update data that goes from 2004 to 2013). The results suggests that Chinese MNCs appear to follow a capital structure that define a lower level of leverage after controlling for key firm characteristics related to leverage levels.