An Empirical Study Of Factors Affecting Capital Structure Of Listed Real Estate Companies

Capital structure is one of those critical issues among enterprise operating management, closely related to corporate govenance, growth, strategy, and firm value. How to decide the capital structure has become the "capital structure puzzles" baffling modern economists. Ever since 1970s, factors which affect capital structure, closely related to the classification of industries, have been widely researched and proven by the academe. In the research area of real estate industry, a large number of foreign scholars focuse on the project level for the capital structure study, lack of attention to the factors from the company level. In China, real estate industry is capital-intensive, which brings practical significance to study its leverage. Howbeit, the research starts later than foreign countries and is not deep enough in the area of real estate corporates' capital structure.With the references of other articles and circumstance the real estate industry facing to, this essay gets the sight into three issues: research into the capital structure and financing of our real estate industry and listed real estate corporates for the better understanding about the features of the capital structure in this area; using static Panel Data model, study the factors which affect capital structure with GLS or FGLS from the financial statistic examples of 36 listed real estate corporate from 1999 to 2006; using dynamic adjustment Panel Data model and the lagged dependent variable as the instrument variable, estimate the capital structure adjustment model with GMM and further analyze the adjustment of the capital structure and the factors affecting it.This essay mainly includes the following conclusions: (1) The leverage of the real estate industry in China is much higher than other industries and the leverage of the listed real estate corporates in A Share is much higher than that in Hong Kong. The capital structure of the listed real estate corporates is common in the lower equity and higher liability; higher current liability and lower long term liability. (2) The listed real estate companies mainly use loans from banks, advance from customers and equity financing as their financing methods. Secondary Offerings play an important role in the equity financing. The channels for financing are simple and the markets for corporation bonds and real estate trusts are not well developed. (3) The current capital structure of listed real estate corporations is affected by the former one. The liability behaviors of different companies at the same stage are related to each other. (4) There is a target capital structure for listed real estate corporations and the adjustment cost is reletively low. (5) The leverage of the listed real estate corporations has a negative relationship with the level of development undertakings, profitability, growth, and the competition extent in the product market; has a positive relationship with the degree of ownership centralization and company size; has no obvious relationship with stock's systemic risk (Beta). (6) Land reserve has positive impact on long term liability but negative impact on current liability and total liability. (7) Real tax rate has negative impact on the choice of current liability and no obvious impact on long term and total liability.