An Empirical Study Of The Relationship Between Capital Structure And Corporate Performance

Capital structure reflects a company’s sources of funds and the proportional relationship among the components of funds.It has been widely studied by the scholars at home and abroad since the appearance of the MM theory.The capital structure has impacts on corporate governance on one hand,and on the other hand it is closely linked to performance;however,the relationship between it and performance has not concluded yet and therefore there is a necessity for study on their relationship.Witnessing a development from scratch to prosperity,the real estate industry has had a place among numerous domestic industries and it associates a large number of upstream and downstream companies,so it is of great significance to ensure the long-term prosperity and stability of the real estate industry.As a typical capital-intensive industry,the real estate has a large demand for funds and occupies the funds for longer period;therefore,keeping a reasonable capital structure is of special significance to maintain sound performance of the industry.Being limited to the real estate industry,in this paper comparatively typical listed companies in the industry are selected as objects of the study and the data of the industry from 2014 to 2016 is used as samples for empirical analysis,with the empirical conclusion discussed and the immanent reasons analyzed,and pertinent suggestions are put forward.This paper first provides a summary of relevant researches to understand the research ideas and methods of previous scholars,find out the commonalities and differences in their researches,analyzes the achievements they have made,figure out the reasons for differences in their conclusions,and conduct the study herein on the basis of their researches.The summary is followed by sorting out relevant theories which together serve as the important support of this paper and also an important basis for the coming hypothesis.The second part of this paper elaborates the relevant theories concerning capital structure and performance,which lays a foundation for the subsequent study.The theories are immediately followed by status-quo analysis.Based on the theories relating to capital structure,this paper analyzes the status quo of its capital structure from two aspects-debt structure and equity structure,to provide a clear picture of the current state of the capital structure of the real estate industry from 2014 to 2016,which also a lays the foundation for proposals.Afterwards,with respect to the empirical analysis of the relationship between capital structure and performance,this paper proposes hypotheses based on theories and in light of the status quo,and then builds a model;after that,based on the well-defined sample data,empirical research is conducted using regression analysis approach and the final conclusion is reached: the asset-liability ratio is negatively correlated with performance;short-term debt ratio is positively correlated with performance;bank borrowing ratio is negatively correlated with performance;The correlation between CR1 and performance is not significant;the correlation of Z index and performance is not significant;the proportion of state-owned shares is positively related to performance,and there is no significant correlation between corporate share and Tobin Q value.What come last are discussion about the empirical conclusions,analysis of immanent reasons and pertinent policy-related suggestions for development of the industry.