Empirical Research On The Relationship Between Interest-Bearing Liability And Business Performance Of Listed Companies Of Real Estate Industry In China

In the first half of 2017,the real estate market is basking another economic boom.However,the development of estate industry is in contraction:on one hand,income of the industry is growing while profitability of asset is weakening;one the other hand,prices of land are rising but the inventory is still expanding rapidly.In the process,debt is increasing gradually.Large amount of money is invested into the real estate market.Based on the background,this paper investigates the relationship between interest-bearing liabilities and relative business performance.It takes A-share listed companies of real estate industry in 2007-2016 as samples,of which independent variable uses net debt ratio to measure the interest-bearing liability of companies and dependent variable uses ROE to reflect its financial and marketing performance effect.Samples are divided into state-owned and non-state-owned companies.The study found that:There is a significant negative relationship between interest-bearing liability and performance of the firms.Ratio of short-term debt and debt have significant negative effects on financial performance.Meanwhile,the negative correlation between interest and liabilities of state-owned enterprises is more significant than that of non-state-owned enterprises.According to the results of the study,it is confirmed that the level of interest-bearing debt is directly related to the downward of earnings.The negative effect of financial risk is greater than its positive effect of excess earnings growth using the financial leverage.The supervision and restraint of creditors is weaken,which is not reflected in the efficiency of corporate governance.Therefore,it is concluded that the growth and the scale of interest-bearing debt should be under control and the efficiency of funds usage should be improved.It is recommended that expanding the financing channels and exploring light business model can reduce the dependence on bank credit and other interest-bearing debt to improve the business performance of enterprises.