Research on the U-shaped relationship between marketization process and corporate capital structure: Evidence from Chinese listed companies

This paper explores the U-shaped relationship between marketization and corporate capital structure using panel data from Chinese listed firms (2012-2021). Applying fixed effects and nonlinear regressions, we find that as marketization increases, leverage first declines and then rises, confirming a robust U-shaped pattern. In early reforms, improved institutions reduce debt reliance; in advanced stages, enhanced capital markets facilitate debt access. Additionally, state-owned equity weakens this relationship, while fixed asset proportion strengthens it. The findings enrich capital structure theory under institutional transition and offer policy and strategic insights for emerging markets.