Study On Capital Structure Of Listed Real Estate Corporations

As a capital-intensive industry, Real Estate industry can not go without the support from financial institutions. No. 121 document issued by Chinese People's Bank exerts an immense influence on the capital raising channel of Real Estate industry, which is exemplified by the need for both financial institutions and real estate enterprises to have a mutual understanding to reduce the involved risk and to maximize the profit. Listed Real Estate corporations, characteristic of the field, offer a good chance to probe into the capital structure of Real Estate enterprises. Having a sixty-year evolution in the west, the study of capital structure produces such classical theories as MM Theorem which introduces agent model, signal model and pecking model. These theories provide a theoretical framework for the analysis into the capital structure of listed Real Estate corporations in China.The present thesis intends to study those factors that determine the capital structure by applying main theoretical findings to listed Real Estate corporations. By applying principal component analysis to locate key elements, the present writer uses a regression method to establish a decision-making model of capital structure which is able to optimize the capital structure. The effectiveness of the model is put on test through a specific case.