Research On The Effect Of Capital Structure On Product Market Competition

Before the 1980s, making capital structure decision is studied in the field of finance, and product market competition decisions is studied in the field of industrial organization. With the progress of development and research disciplines, research found that there is a close relationship between the two. From the existing literature, most of the research on the impact of the capital structure on the company’s products competition are studied in the view of the macro environment and industry competition, while little in the view of funding constraints. Even if it has considered the impact of financing constraints, but also in relatively mature industry or manufacturing, less from the perspective of the real estate. However, the capital structure of different industries are significantly different. There will be different product market competition affected by capital structure. Thus, under the regulation of the financial constraints, the study examines how product market competition is affected by capital structure decisions, and the sample data is from the real estate business. In theory, this study provides a new basis for the research of capital structure decisions and product market competition. In practice, it optimize the capital structure decision as soon as possible to establish their own development competitive advantage.This paper studies how capital structure decisions affect product market competition both in empirical research and normative research. The study selects the data of listed real estate enterprise from 2010 to 2012,and tests the validity of the theory about the the effect of capital structure on product market competition in the real estate industry. The conclusions are:(1)Capital structure and product market competition is correlated negatively; (2)The financing constraints plays a regulatory role when capital structure affect product market competition; (3)When the financing constraints is lower, the effect of capital structure on product market competition is not significant; (4) When the financing constraints is higher, the relationship between capital structure and product market competition is in an inverted U-shape.The results of this study enrich the theoretical research on capital structure and product market competition, and provide some basis for the capital structure of the real estate enterprise. But this study has the following limitations:the choice of design variables and data, as well as the range of the sample during the measurement model.