A Study On The Influence Of Chinese Listed Real Estate Companies Debt Financing To Business Performance

The study of influence of the debt financing on corporate performance has gone through many stages. Although each school’s point of view is not consistent, all school has the same point that debt financing with reasonable size and structure do improve the corporate performance. In recent years, the real estate industry of our country has gone through an advance rapidly improvement. The real estate industry is an industry assembles massive funds and accumulates dangerous risk. The scholar of our country have done many research on the relationship between capital structure and real estate company’s performance, and has shaped a completely system. But research on real estate company’s performance from the debt financing perspective still doesn’t mature. The debt-to-assets ratio of our real estate company is high, so it is important to develop the positive effect of debt to enhance the real estate company’s performance eventually.Based on the capital structure theory, in the comprehensive on the basis of the previous studies, analysis the debt financing influence on corporate performance from four aspects, financial leverage, incentive and constrain, creditor involvement, and bankrupt threat. By adopting the combination of theoretical research and empirical analysis methods, this paper firstly design the empirical analysis scheme, and then select53Chinese listed real estate company, and data from2009to2011. Doing the analysis secondly, choosing return on equity as the explained variable, debt-to-assets ratio, short-term debt financing rate, long-term debt financing rate, commercial credit debt financing rate, disposable free cash flow rate as five explain variable, company size and company growth as two control variable. Thirdly doing descriptive statistical analysis of every variable, and use multiple regression analysis and test finally to find the relationship between explained variable and all the explain variable.The conclusion is:First, debt-to-assets ratio and listed real estate company’s performance is negative correlation, which means the high debt-to-assets will bring the negative effect of financial leverage and cause the performance glide; Second, short-term debt financing rate and listed real estate company’s performance is negative correlation, which means too much short-term debt will bring the company too much repay pressure and is negative to performance; Third, the relationship between long-term debt financing rate and listed real estate company’s performance is not significant. It reflect that Chinese listed real estate company should reduce the short-term debt and increase the long-term debt to full use the long-term debt’s positive influence. Fourth, commercial credit debt financing rate and listed real estate company’s performance is positive correlation, which means the commercial credit debt not only can decrease the capital cost, but also better to company’s credit, and it is very essential for company’s long-term performance. Fifth, disposable free cash flow rate and listed real estate company’s performance is negative correlation. This shows that Chinese listed real estate company should intensify effort to control the disposable free cash flow, in order to strength the using efficiency of funds and improve performance eventually.