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The capital structure of listed real estate companies Factors that Affect

Author: MaoZheMin From: www.yourpaper.net Posted: 2010-01-26 06:46:25 Read:
[Abstract] listed real estate companies in SPSS10.0 analysis tools, the use of principal component analysis and empirical analysis of factors affecting the capital structure of China's private listed companies, the results showed that: the size of the company and its gearing ratio is related; operating capacity, the degree of concentration of ownership, and the gearing ratio is negatively correlated; non-debt tax shield, profitability and solvency and capital structure is not significant.
[Keywords] listed real estate company's capital structure


Real estate development investment and long payback period, and expensive real estate values ??and the real estate enterprises are facing development, the investment required to fund huge issues such as financing therefore become an important issue in the real estate can not be avoided. According to Securities Times "2009 China's real estate listed companies TOP10 study statistics, asset-liability ratio of listed real estate companies in Shanghai and Shenzhen in 2008 at 56.86%. This shows that the excessive dependence on bank credit for real estate industry, the capital structure is irrational. In this paper, the research firm's capital structure influencing factors, and help from the whole to consider reasonable way to raise funds, and to adjust the company's capital structure; help the stakeholders of the real estate listed companies (enterprises, banks and so on) and adjust their behavior.

Research methods and data processing

1. Research methods
The author uses principal component analysis method to extract the main influential factors of research and analysis. The basic idea is that the appropriate linear transformation, the multiple indicator variables into a few comprehensive indicator variables, and makes several integrated indicators as much as possible to reflect the original variables contained in the amount of information, and irrelevant to each other.
2 variable design, data collection and processing
Author research at home and abroad, and combined with the actual, select the 16 indicators of the impact of China's private listed company's capital structure as explanatory variables, indicator variables as follows:
(1) reflects the scale of business indicators: total assets, the main business income of the natural number two indicators reflect the enterprise scale factors;
(2) reflect the growth indicators: the main business income growth, and growth rate of total assets;
(3) to reflect the ownership or shareholding structure indicators: national percentage of ownership and the outstanding shares ratio;
(4) The effective income tax rate: tax payable and the ratio of the total pre-tax profits;
(5) to reflect the value of the collateral indicators: the ratio of inventories to total assets;
(6) reflects the non-debt tax shield indicators: Depreciation of fixed assets to total assets ratio;
(7) reflects the profitability indicators: the main business profit margins, ROE;
(8) reflects the short-term solvency indicators: current ratio and current liabilities ratio;
(9) reflect the ability of business indicators: accounts receivable turnover ratio, inventory turnover, total asset turnover.
In this paper, the carrying amount of the asset-liability ratio indicators as explanatory variables to reflect the general characteristics of the corporate capital structure.
Sample selection and data sources
The sample data of listed companies of the China Securities Regulatory Commission, the industry statistics, 49 listed real estate companies in the country as of December 2005. In view of the residential development is the mainstream of the current real estate development, this study focused on listed real estate company specializing in residential development, mainly engaged in land development and management of real estate listed companies are not taken into account, such as Waigaoqiao, Lujiazui, ST also excluded and losses of the company, and finally selected 24 listed real estate companies conducted a cross-sectional analysis of research. The raw data from Chinese listed company information (www.cnlist.com), and select the data of each listed company in late 2005.

Model analysis and results

Using the SPSS10.0 statistical analysis software, draw six main ingredient, according to its meaning is defined as follows:
Principal component 1 is defined as the profitability indicators; principal component is defined as the enterprise scale indicators; principal component is defined as operating capacity indicators; principal component defined as non-debt tax shield; principal component 5 is defined as a company's solvency indicators; principal component 6 is defined as the degree of concentration of the company equity indicators.
Assumed that the carrying amount of the asset-liability ratio with six main components there is a linear relationship, its multiple regression analysis, regression model was established to select six main ingredients, as follows:
DAR = 0 1 * v1 2 * v2 3 * v3 4 * v4 5 * v5 6 * v6 j
Formula: 0 is the constant term, i is the main component of the estimated parameters, Vk is the principal component, j is the error term.
Regression model analysis
In Table 1, we can see that the model goodness of fit coefficient of 0.680 (0.567) adjusted the basic explanatory variables DEFINITIONS explanatory variables. Table 2 can be drawn: factor 2 that firm size and capital structure are related, factor 3 operating capacity and factor 6 that the degree of concentration of ownership of the Company and the asset-liability ratio is negatively correlated with the other three factors (profitability, non-debt tax shield The relevance of the solvency) and asset-liability ratio was not significant.
3 Empirical Analysis Summary
By the analysis above, we can know that the capital structure of listed real estate companies by company size indicators, operating capacity indicators, indicators of the degree of concentration of ownership factors, profitability, non-debt tax shield, as well as solvency is not significant.
The (1) the size of the company and its gearing ratio positively correlated
The main reason: the domestic real estate enterprises, including listed real estate company, in its various debt financing channels, the bank through the direct or indirect loans become a major source of funding for real estate debt financing. Smaller firms from direct loans for large enterprises are more stable, this case allows banks to more easily trust, and thus be able to provide more credit funds. From indirect loans, real estate development funding "other funds", the vast majority of deposit and advance payment of the buyers, and the buyers of these funds is basically individual housing consumer loans. More due to the large-scale real estate enterprises to obtain the trust of consumers, consumers are more willing to buy the products of these real estate companies, and thus easier access to the bank's indirect loans. Therefore, the most important as our real estate debt financing channels for bank credit, either from direct or indirect, in terms of, are preferences in large-scale real estate enterprises.
(2) the viability of the asset-liability ratio is negatively correlated
And other listed companies, funds needed by the business is relatively less when the real estate company operating ability, and thus can be less liabilities. Conversely, should the business less capable, more working capital you need, you may be more dependent on the liabilities financing.
(3) the degree of concentration of ownership and asset-liability ratio is negatively correlated
Reasonable explanation: China's listed companies, when companies need external financing, the interests of the shareholders of agents that management prefer not much binding, while not shake the status of large shareholders holding equity financing, rather than The binding strong economy debt financing. The company shares the higher the concentration, the more obvious the management of this preference.
(4) non-debt tax shield corporate assets-liability ratio had no significant effect
Depreciation, as an element of cost accounting income accounting, the endogenous financing a negative correlation between the two instructions the natural characteristics of the financing of the corporate depreciation. However, in China's listed companies, the low rate of depreciation accounting for total financing. According to statistics, in 2002 51 before the end of 1992, listed companies Depreciation financing accounted for 6.25% of the overall financing, real estate listing because of its industry characteristics determine its depreciation accounting for total financing ratio is lower relative to companies in other industries to this article 2003 24 listed real estate companies, for example, the depreciation of financing accounted average of only 2.20% of the total financing, therefore resulting in the non-debt tax shield and the asset-liability ratio relationship was not significant can understand.
(5) the profitability and solvency and capital structure does not significantly influence
This point can be explained as follows:
In the case of this imperfect market economy in China, the legal system is not perfect, some companies, especially in the real estate business conditions to obtain bank loans is not conditional on its profitability and solvency. The extent of the enterprises and other relevant interest groups tied largely determine the ability of the business to obtain bank loans, the availability of working capital, thus contributing to the faster it grows larger the scale, increase market confidence in the business.
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