Business networks, financing and firm performance in China

  • Haijian Liang

Student thesis: Doctoral ThesisDoctor of Philosophy


This thesis maps out business networks among listed companies in China andinvestigates their consequences on firms’ access to financial resources, profitability andstock return volatility. Using data from China Stock Market & Accounting Researchdatabase and Datastream database from 1997 to 2011, this study identifies businessnetworks among listed companies and model their effects using micro econometricmodeling approach. The statistics show that the number of firms in business networks isexpanding considerably over the years. However, networks do not develop evenlyacross sectors, and state-owned enterprises play a prominent role. The empiricalanalysis suggests that firms in business networks have superior access to long-termdebts, short-term debts, trade credit and have more efficient working capitalmanagement and sufficient cash for investment. The effects of business networks onfirms’ access to financial resources are mediated by ownership of listed companies andnature of business networks. Furthermore, we find business networks affect firmperformance negatively. Evidence suggests firms in business networks experiencehigher management cost. Ownership networks and collaboration networks, among threetypes of business networks, show to have significant influence over firms’ managementcost and performance. Interestingly, concentrated ownership acts as a mediator fornetwork effects. Finally, this study also presents evidence that firms in business networksexperience more volatile stock returns. In particular, network structures have significantinfluence over firm stock return volatility. To conclude, our study shows that businessnetworks may induce both positive and negative effects, which provide insights to firmstrategy-making in terms of engaging with business networks to achieve organizationalgoals.
Date of Award12 Dec 2018
Original languageEnglish
SupervisorJun Du (Supervisor) & Michail Karoglou (Supervisor)


  • business networks
  • corporate finance
  • firm performance
  • corporate governance
  • stock return volatility

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