An Empirical Study On Capital Structure And Performance Of Listed Real Estate Companies In China

In 1952, David·Durant proposed three theories of capital structure. And from now on academicians had begun many researches on the capital structure. Nearly 60 years later, scholars have explained how capital structure influents corporate value from various angles. But there is no unified answer on how capital structure affects corporate value. And no one found out whether there is optimal capital structure.Different industries have different capital structure, and different capital structure will affect corporate performance differently. So this paper chose an industry to analyze. And the paper will draw on our predecessors'research results, by choosing listed real estate companies as our object, combining the characteristics of Chinese capital market, to analyze how capital structure affects listed real estate corporation performance. And the paper will try to answer whether there is optimal capital structure in listed real estate companies.In the past decade, real estate industry has developed rapidly. It plays an important part in our national economy. The industry has the following characteristics:a high demand of funds, high assets and liabilities rate, high dependence on bank funds. And also the industry has strong relevance with other industries, such as construction, building materials industry, finance services. Therefore, it will make great sense to analyze the relationship between capital structure and the performance in real estate industry.In literature review, it finds that capital structure affects firm performance by two ways:financial leverage effect and governance effect of debt. In the paper, equity ratio and factor analysis are chosen to measure two variables:capital structure and firm performance.Real estate performance is affected by various factors. This paper considered about the following factors:corporate size (asset size), state-owed shares rate and stock concentration. In empirical study, only one model was used to describe the relationship between capital structure and corporation performance. It is multiply linear regression model. In the multiple linear regression analysis, listed real estate corporation performance has negative correlation with equity ratio, state-owned shares, and has positive correlation with firm size, stock concentration.After the empirical study, we get a conclusion:listed real estate companies in China have too much debt, and they must change their capital structure and find more ways to finance.At the end of the paper, it points out the shortcomings of the paper and the future development of the study.