The Relationship Of Capital Structure And Corporate Performance Of Chinese Private Listed Companies In Real Estate Industry

Capital structure means the component ratio of all kinds of capital in a company’s capitalization, which mainly includes long term debt and equity capital. So, the most fundamental capital structure is the proportion of long term debt and equity capital. Capital composition not only affects the capital costs of a company, but also its governance structure and business operation. As a result, capital structure can influence the company’s overall performance. The relationship of capital structure and company performance has become an important issue for many scholars at home and abroad as to its theoretical value and practical significance.Real estate is one of the biggest concerned businesses of our Chinese people these years. As a fundamental and pillar industry of our economy, it has been playing an important role in our life. Meanwhile, because it is a capital intensive industry, its survival and development depends a lot on the raising of funds, which makes the capital cost a significant problem. In recent years, the future of real estate starts to wear a veil because of the impact of financial crisis and the regulative policy of our country. Therefore, realty business has to strengthen it competitive advantage through other methods rather than only enhancing its business capacity. The adjustment of capital structure is one of methods, which can minimum the capital cost. Due to a certain extent guarantee of fund for central enterprises, this method is much more important for private enterprise. This paper uses both normative and empirical ways to study, hoping to optimize the structure of capital for private enterprises and contribute the healthy development of our real estate’s capital market.This paper includes five parts:The first part is the introduction:it generalizes the background and the meaning of the research. And then the research conclusions are summarized and analyzed by the numbers which based on the literature review both at home and abroad, the research method and configuration are presented, also the possible innovation and shortage of this paper.The second part is the relevant theory:firstly, relevant concepts, such as real estate, private listed company, capital structure and company performance, have been defined. Secondly, the basic theory of capital structure is presented, which has laid a foundation for the study of relevant variables of capital structure. Thirdly, the measurement of corporate performance is analyzed. Finally, the mechanism of action of capital structure to corporate performance is presented, which is closely related to the determination of model.The third part is the research and design:the first part is research hypothesis which is based on the literature review and the present situation of our private listed companies in real estate. In the second part, the sample and data are selected, the variables are opted according to the research hypothesis mentioned before.The forth part is the empirical analysis of capital structure’s influences on corporate performance. The descriptive analysis method is adopted firstly to find the feature and trend of capital structure according to the gathered qualified data of our private listed companies in Shanghai Stock Exchange from2009-2012. On that basis, the regression model is designed and its relativity is tested. The influence of the factors of the capital structure on companies’ performance is analyzed emphatically by empirical analysis method.The fifth part is the empirical results and policy recommendations. Based on the empirical results, we analyzed them, and then combine the theory and realistic situation, trying to provide a suggestion on perfecting capital structure and enhancing corporate performance, then looking forward to the future.