The Impact Of Debt Financing To The Performance Of Traded Real Estate Company

Debt financing belongs to one of the important external financing options of a company. The selection of financing structure has definite impact to the company’s overall operation and performance. The real estate industry, a capital-intensive industry which has a high debt ratio and long development cycle, makes the choice of debt structure a vital role in affecting the performance of traded real estate firms.This article, from the research background and significance of the research, reviewed, classified and organized the relevant domestic and international researches on corporate performance based on the impact of debt financing. It has provided unique research direction and methodology based on previous research perspectives, experience, methods and findings. This article compiled and analyzed the MM theory, trade-off theory, agency cost theory, signaling theory and XX financing theory based on the chronological order when these theories were published. It has also analyzed the impact of regulations and policies under the recent development of China’s real estate industry to the overall performance and financing conditions of this industry. The article selected related variables and constructed a regression model based on the overall level of debt financing, term structure and debt origin structure using sampling date from 2010 to 2014.The results showed that the overall level of debt, the debt financing of traded real estate companies had negative effect on the corporate performance based on an overall debt level; the long-term and short-term debt also had negative effect on the corporate performance in terms of the structure of debt maturity; the bank loans and bond financing had significantly negative impact on the corporate performance in terms of the structure of the debt origin. However, there was no significant indicator that the commercial credit resulted in negative impact on the overall corporate performance. According to the results obtained in the empirical analysis above, this thesis provided the following recommendations for the structure of debt financing in traded real estate companies: Improving the efficiency of bank credit governance. Strengthen commercial credit management. Optimize debt financing structure, broaden debt financing channels, and enhance the bond financing.