Research On The Optimization And Adjustment Of Capital Structures In China’s Listed Real Estate Companies

The optimization and adjustment of capital structures is one of the key issues on corporate finance. In recent years, in order to meet the demand on investments, China’s listed real estate companies borrow greatly, increasing their debt pressures. It is said that the capital chain of listed real estate companies is growing increasingly tense. In this context, it will be a basis and reference for financing decision and industry policy to study the optimization and adjustment of capital structures, taking into account the financing liability characteristics of Chinese real estate companies. Meanwhile, the analysis on the optimization and adjustment of capital structures, which integrates the industry characteristics of real estate, provides a new idea in the field of corporate finance. Therefore, the research is of great theoretical and practical significance.Based on existing literature, the general research framework for the optimization and adjustment of capital structures in China’s listed real estate companies is proposed, respectively from the determination of the optimization target(optimal capital structure), the comparison between realistic and optimal capital structures, and the analysis on the capital structure adjustment. The dissertation firstly establishes a mathematical model for optimal capital structure, by incorporating the financing characteristics of China’s listed real estate companies, calculates the optimal capital structures of sample companies, and conducts the sensitivity analyses for parameters. Secondly, a comparative analysis between realistic and optimal capital structures is carried out, and on the basis of research on supply and demand of funds, the reason for realistic capital structures deviating from the target is explained in three aspects: corporate characteristics, industrial development and macroeconomic. Finally, based on the partial adjustment model, the adjustment speeds of capital structures are calculated, the adjustment behavior is divided into the positive and non-positive, and the determinants of capital structure adjustment are studied respectively from the micro, concept and macro level. Within this framework, based on the theoretical analyses, the dissertation conducts empirical studies with the data of Real Estate Climate Index, some of the macro data and financial data of 66 listed real estate companies in China during the period 2003-2012.The main conclusions include:(1) the optimal capital structures in listed real estate companies depend on firm characteristics, housing prices, interest rates and corporate income tax rates.(2) There are great differences between the realistic and the optimal capital structures in listed real estate companies, and most companies tend to be over-indebted. The imbalance between supply and demand of funds plays an important part in the derivation form the optimal capital structure.(3) The main styles of capital structure adjustment for listed real estate companies are partial and reverse adjustment. On the micro level, the capital structure deviation in prior period and the profitability have significant promoting effects on the adjustment of capital structure; on the middle level, the development of real estate industry has positive and negative impacts on the adjustment behavior simultaneously; and on the macro level, economic conditions and macro-control will significantly affect the capital structure adjustment.Based on the findings and conclusions, the suggestions includes: The financing target in listed real estate companies should vary with corporate characteristics and market conditions(housing prices, interest rates and tax rates).(2) Suggest the government relax the conditions for equity refinancing and maintain the monetary policy prudent; advise listed real estate companies to expand their financing channels and take a serious look at the demand of funds, minimizing the extent of deviation from the optimal level.(3) In order to improve the adjustment speeds of capital structures, listed real estate companies should pay much attention to the cooperation between companies.