An Empirical Study On The Relationship Between Debt Finance And The Financial Performance

According to the modern financial theory research,the capital is a very important resource for all the companies.On the one hand,it can affect enterprise capital costs directly.On the other hand,it is related to macroeconomic operation,corporate governance and corporate performance.The main source of external enterprise capital mainly includes Equity capital and debt capital.After ten years of rapid development,our country's capital market is playing an important role in the national economy and has become an important channel for Enterprise financing.But as China's capital market is still starting due to their substandard system and volatility brought by the internal defects,the listed companies finance equity with a lot of uncertainty,which is shown in capital market instability that has significant influence on the financing functions,postponing the time of listed company raising money.Meanwhile,costs of equity financing capital are relatively high compared to debt financing,which improve the overall cost.So companies prefer debt financing when choosing financing method.Different term structure of debt financing will have different economic consequences.By studying the impact of different debt financing term structure on corporate performance,not only it will make listed companies use debt financing more efficiently,but also has important practical significance for promoting the coordinated development of the capital markets function.Different industries have different characteristics of debt financing structure.So I should consider the effect of the industry when I make debt financing and enterprise performance.Because national macroeconomic policies have a big effect on real estate,and real estate industry has high asset-liability ratio and is highly linked to people's livelihood and leads to the development of industries such as steel,cement,building materials and financial service and so on,the real estate industry has developed so fast over the past decade.But more and more real estate companies are biased in favor of debt financing and there are large differences between the various real estate companies in Profits.So through analyzing the relationship between debt financing in this industry and company performance,it will be useful for the optimization of financing structure to improve operational performance.So I selected real estate listed companies as the object of this paper.In accordance with the theoretical analysis-empirical test-Suggestions logic,the thesis contains five chapters as follows:In the first chapter firstly,I combined the country's macroeconomic policies on the estate industry,described the background of this article and proposed the purpose and significance of the study.Secondly,I introduced the ideas and methods of this study,in order to analyze the relationship between debt structure and corporate performance of listed real estate companies through two methods,literature analysis and mathematical empirical model.Then,I summarized the content and the logical framework of this article through combination of text arid charts to make it clearer.In the second chapter,I reviewed the literature and theoretical analysis both home and abroad.Firstly,I studied foreign-related empirical research to a domestic scholars,in order to academia is currently on debt financing and company performance study the situation there is a certain degree of grasp,of this paper to carry out direction;then,respectively,elaborated a theory of capital structre and theory of corporate performance,is designed to lay the theoretical foundation for the full text.In the third chapter,I first introduced the basic situation of the real estate industry,including interpreting of the concept and analyzing of industry characteristics.And what's more,I explained the operational characteristics and sources of funding.Finally,I analyzed listed real estate company's debt structure characteristics using descriptive statistical methods to compare all the listed companies.This chapter is characterized by the use of a large number of objective data directly to explain the basic situation of the real estate company clearly.The Fourth chapter is correlation analysis of the debt financing and corporate performance.The main part of this chapter is correlation analysis above using empirical test.Firstly,I screened the listed real estate companies and excluded some,which are incomplete or in consecutive losses.So 67 listed real estate companies became the sample of this study.Secondly,I delimited each variable and pose hypothesis according to hypothetical capital structure theory and the status quo of China's real estate industry.The hypotheses are as follow:?Asset-liability ratio of listed real estate companies and company performance are negatively correlated;?Short-term debt ratio and corporate performance are negatively related;?Long-term debt ratio and corporate performance are negatively related;?Firm size and corporate performance are positively correlated;?Ownership concentration and corporate performance are positively correlated.I finally conclude that five assumptions are established based on the model,factor analysis and linear regression analysis.The fifth chapter is research conclusions and policy recommendations.This chapter analyzed the empirical results,optimized the debt structure of listed real estate companies and suggested policy recommendations to improve corporate performance based on the previous chapters.Finally I described the limitations of this study and made outlook on the future research on the basis of the limitations of analytical articles.The author humbly believes the main contributions of this paper are as follows:1.Current researches are inclined to analyze company's performance through effects of ownership structure governance rather than debt financing.But this article studied the relationship between sampled corporate performance and debt financing through debt financing,which replenished the research areas.2.The capital structure of industry has its own characteristics.Domestic research on effect of debt financing on corporate performance is mainly focused on the whole listed companies and rarely discussed by industry.In this paper,the real estate industry is our object of study,which made the paper targeted.In recent years,the real estate industry is highly linked to people's livelihood and is strictly regulated and highly paid attention to by the country.Therefore the study of the capital structure of the real estate industry has the value of the times.3.In the existing research on corporate performance,the evaluation index was relatively homogeneous,such as Tobin's Q value,economic value added.But this article examined company performance through multiple perspectives and comprehensive use of various financial indicators,based on which I used principal component analysis to obtain a comprehensive performance evaluation of corporate performance score.4.I chose the dates from GTA database and the National Bureau of Statistics website,and found the relevant data of 67 listed real estate companies in the four years,2007-2010.The sample size was larger and more practical significance compared to existing research.But because of limited capacity and inadequate time,there are many deficiencies:1.This article only chose the overall level of debt financing and the term structure to analyze the relationship between debt financing and corporate performance of listed real estate companies,but didn't describe the effect of types of debt financing on the performance of the industry.2.When measuring the performance of listed real estate companies,I selected four financial indicators(covering profitability,solvency,operational capacity and development capacity)to do factor analysis,but I selected without a uniform and rigorous standards as a reference,which may affect the correct evaluation of the performance of the business.3.Empirical model still needs improvement.This article mainly discussed the effect of debt financing of listed real estate companies on the performance of the company.But the performance of real estate industry will be subject to a number of factors because the market is relatively complex,such as the impact of the country's macro-control policies?cycle of the industry.So in the future I should find effective ways to further improve the model and improve the explanatory of the model.4.Because of limited knowledge,there may be some improvement when analyzing data and presenting views.At the same time,there may be some error because the sample was not comprehensive.Despite this,I believe that the proposed research perspective and research findings are still of great significance in understanding and analyzing the financing structure of the listed real estate companies.In this paper,the inadequacies in the analysis can make progress;I urge the criticism and correction of teacher experts.