Research On The Impact Of Capital Structure On Corporate Performance Of Real Estate Listed Companies

Capital structure reflects the rights and obligations of the stakeholders on centralization, which affects corporate’ capital cost capital, and closely relates to the corporate governance structure and operating performance. Since Miller and Modigliani proposed the MM Theory, both Chinese and Western scholars have deeply and extensively researched on capital structure in the past few decades. However, there is no consensus on the composition of optimal capital structure, and how capital structure influence corporate performance etc, which “the puzzle of capital structure” needs to be explored continually. Real estate industry has become pillar industry during the past 2 decades in China, since the implementation of reform. Compared with other industries, the financial leverage in real estate industry is relatively high, because the main channel of developing funds is bank credit, leading to the risk of frangible financial chain. In recent years, the irrational expansion of the capital structure in real estate industry is serious, which make the cash chain of the real estate enterprises extremely fragile. With the aggravating problem of surplus and inventory overstocking, as well as with a series of macro-control policies, the operating performance of real estate enterprises is ups and downs, and even the voice of "China’s real estate bubble will certainly crash" is overwhelming. Therefore, studying the impact of capital structure on corporate performance of the real estate listed corporations has profound implications in theory and practice under the period of reform of real estate industry.This thesis firstly systematically summarizes some related researches on the influence of corporate performance on capital structure, and then distinguishes and defines the concepts of capital structure and corporate performance. Next, it will raise hypothesis and empirically analyze the relationship between the real estate listed companies’ capital structure and corporate performance, with the support of theories. In the empirical part, this thesis will take samples of 128 Chinese real estate companies listed in A share market from 2012 to 2014, adopt panel data regression model to analyze the effects of capital structure on the corporate performance from two dimensions of ownership structure and debt structure. Lastly, give recommendations on the basis of empirical analysis.The findings of this thesis are: 1. On the aspect of ownership structure influencing corporate performance, the concentrated structure has positive effects on corporate performance. However, because of the situation of “dominance” which is lack of control to the largest shareholder, the ownership structure has hardly achieved to the best. Meanwhile, due to the non-tradable shares reform, there is less effects of state-owned shares on corporate performance, and managers holding shares is conducive to the improvement of corporate performance. But it is uncommon that real estate companies listed by management holding shares, from now on. 2. On the aspect of debt structure influencing corporate, the negative influence of current liability on corporate performance is obvious, because the operation performance declines following the expansion of debt scale. Additionally, stated-owned business banks, as the main creditors, fail to play supervisory role, resulting in serious negative corporate performance brought by the higher loaning ratio. 3. The macroeconomic regulation has little negative impact on corporate performance of real estate listed corporations, because, to big extent, the hysteretic nature of policy transfer, as well as the irresponsibility of several local government when implementing the regulatory policy.