The Capital Structure Research On Influence Factors Of The Real Estate Company In China

As a pillar industry of China’s real estate industry is a capital-intensive industry, thedemand for funds, long development cycle, influenced by macroeconomic policy. From thecurrent situation of China’s real estate corporate finance, short-term debt financing is currentlyChina’s real estate enterprises in major ways and means of financing. The company will beable to get profit by financial leverage. But the financial leverage too high will lead tobusiness risk, go against the long-term development of company. In order to guarantee thecapital supply and normal operation of real estate companies, research on the real estateindustry capital structure is one of the main problems in our country at the moment. On theone hand, we should understand our current development situation in capital structure of realestate company, lead the real estate industry to the healthy and stable development; on theother hand, analyzing the various factors of the real estate company’s capital structure, leadthe real estate industry to optimize their capital structure.The article introduce the present status, current operation and the main features of thereal estate company among the country. Asset-liability ratio is up to60%-70%, higher thanthe average level of other industries, funding is given priority to domestic loans and financingchannels and means is single. The article is based on the economy data are collected from2003-2013, choose122Real Estate companies in Shanghai and Shenzhen stock exchangecenters. Five Micro-elements (profitability, enterprise scale, development ability, operationability, assets structure) and six Macro-elements (the growth of money supply, the growth ofgovernment spending, interest rate, the GDP growth rate, the risk of credit default, the returnsof stock market). After deep research, a conclusion could be drawn as follow, in themicroscopic perspective, profitability and assets structure are negatively related; enterprisescale, development ability and operation ability are positively relate. In the macroscopicperspective, the GDP growth rate and the risk of credit default is negatively related; thegrowth of money supply, the growth of government spending, interest rate and the returns ofstock market is positively related. Finally, in combination with the characteristics of the entirereal estate industry, it is put forward corresponding policy recommendations. It is necessary toreplace the current suppression of regulation, strengthen the supervision of the real estatecredit and support the real estate enterprises diversified financing innovation. At the sametime the real estate companies should give full consideration to its own characteristics andarrange their capital structure reasonably.