The Introduction Of External Environmental Factors In Capital Structure Of The Real Estate Industry

In this paper, the author select the real estate industry with high asset-liabilityratio as the research sample and try to unveil how the real estate industry factors,industry environment and the macroeconomic environment influence capital structure.The results show that the capital structure of China’s real estate industry generallyconsistent with pecking order theory, the real estate industry’s profitability can explainthe capital structure up to61.15%, but the explanation degree is well below theindustrial sector. This difference is due to the real estate industry’s high debt ratio,andit’s more sensitive to changes in the external environment.The empirical results showthat many external environmental factors have impact on capital structure, furthermore,the real estate industry’s capital structure can be explained up to99.52%by industrycharacteristics including industry profits and industry investors, industry environmentincluding housing sales price index and price index for land transactions, andmacro-environment including gross domestic product indices,interest rates and moneysupply quantity.The authors then use firm-level data to further the empirical research. There istoo many external environmental factors selected, and the author use two ways to dothe research. The first method is by including all independent variables into theregression equation, and then gradually remove them; the second method is to reducevariables by data reduction technology and then do regression analysis. Empiricalresults show that many factors, including corporate identity factors and externalenvironmental factors, impact the capital structure. The relationship between capitalstructure and indicators is significantly different before or after2004, indicating thatthe capital structure is influenced by the macro-control effects and it is in the dynamicadjustment process. Among the enviromental factors, Economic situation is the mostimportant one that affect the real estate industry’s capital structure. When it comes toFirm Characteristic factors，the company’s asset return (ROA) is the most importantand most direct factor that affect the company’s capital structure. Finally, the paperfurther confirmed external environmental factors not only influence the capitalstructure, but also affect the debt maturity structure.