Correlation Analysis Of The Income Tax Burden And Debt Financing

In1963, Modigliani and Miller published the paper "Corporate Income Taxes and the Cost of Capital:A Correction ". Demonstrated that the value of a firm consists of the present value of uncertain future income and the present value of certain income, and that the tax shield will increase the value of a firm in the presence of tax deductibility of the interest payments on debt. And the Modigliani-Miller Theorem also demonstrated that Tax saving value and corporate income tax rate related. On a corporate, higher income tax rates, the greater roles by the tax shields for creditor’s rights financing pay interest play. Therefore, the industry of high income tax burden, which should be inclined to the creditor’s rights financing; The industry of low income tax burden, which should be opposite.In recent years, through the China real estate statistics yearbook, found China’s real estate enterprise capital demands growth more than20%a year individual year growth even more than40%and most of capital source is related with the bank credit. In2008, China revised the income tax law, new revision of the tax law, on one side unification the income tax for the China and foreign corporate, and. on the other side reduction the legal rate to25%, for the corporate of high tax burden is a good news.When real estate enterprise debt capital ratio growth slowed to single-digit level, as far as concerned, It is not an accident. The old tax system the real estate under the tax burden has been hovering around33%legal rate, heavy tax burden makes the real estate enterprise had to using debt financing to avoiding tax, and after tax reform, enterprise tax burden declined which causes real estate enterprise tax avoidance preference decreased, so reduce to the debt financing needs.Through the CSMAR database data analysis found that China A shares listed real estate development enterprise average asset ratio between2005and2009were73%,67%,66%,75%and62%, the asset-liability ratio is higher; Marginal tax rates were31.59%,32.32%,32.17%,26.99%and28.57%, the enterprise tax burden higher current legal rate close to. The real estate industry enterprise in the enterprise income tax burden is irregular high, will seek more tax avoidance, so they inclined to debt financing.This paper selects the2005to2009years China A shares listed real estate development and manage company data as research samples, and analysis of China’s real estate industry enterprise income tax burden and financing of the relationship between the structure arrangement. Because of the debt tax shields only play a role when interest expense in benefit of debt capital, so this paper selects with interest rate debt funds as be explained variables, the company current enterprise income taxes of the period marginal tax rate to explain the variables, the company scale, profitability and operation ability variables as the control variables simply regression analysis.In the analysis method, this paper makes a study of the method used to learn from the car, take descriptive statistical analysis for the main, regression analysis methods supplemented by the method of study.This paper got the point by the time of major policy to interval analysis, descriptive statistics data before and after the comparative analysis, get policy adjustment for debt financing of the actual effect of the real estate enterprises and intuitive conclusion debt financing and income tax burden of taxation trend. Comparison of the relevant conclusions before and after, can study for the enterprise income tax burden on real estate enterprise of the influence of debt financing.The statistical analysis to interval, on the basis of the interval of the income tax burden and debt financing scale of regression analysis, as described above statistics and analysis of additional explanation.Research findings, China’s a-share listed real estate development enterprise debt financing is significant correlation with the corporate income tax burden.But the related paper shows that, the listed company in our country, was inclined to equity financing than debt financing, this phenomenon will be partly explained by incomplete capital market and financing environment. In addition, the relation of real estate debt financing scale and the corporate income tax burden could be decided by the characteristics of the industry, and not only by high tax burden. According to "trade-off theory", debt financing will be issued to the market in front of the effective information, so looking forward to the future, in the long run, with more improvement of financing environment in our country, the conclusions may have a certain significance for other industry.