Product Market Competition On The Dynamic Adjustment Of Capital Structure Of Real Estate Listed Companies In China

The theory researches in the term of Capital Structure based on the industrial organization angle began in the 1980s. This theory broke up the status quo of traditional Capital Structure Theory and the traditional Industrial Organization Theory both of which studied researches independently, and held the opinion that company's capital structure should be designed comprehensively with further concerns about its product market competition, the development strategy, the capital market condition and so on.In 2008, China's macro economic environment has come across a big change, at the same time Real estate industry has also entered a period of downward adjustment after the vigorous development of 2007 with the evidence of declined economic growth index. Specifically, in front of the big adjustment of product market, listed companies of Real estate industry with a high debt capital structure cannot return on investment in time, as a result, fund shortage has become the most serious problem of those companies.This paper combines product market competition and capital structure together, comprehensively analyses the current status of product market competition and capital structure of China's Real estate industry. Based on the dynamic panel model, it also detailed illustrates the effect of product market competition on the adjustment of capital structure. The research turns out that product market competition have significant influence on the capital structure choice and bias of the firm' s capital structure from its optimal ones, but we do not find evidence as to see the relationship between product market competition and the speed of the capital structure adjustment.