The Relationship Between Capital Structure and Performance of Real Estate Companies in China
Comparative Analysis of Trade and Finance in Emerging Economies
ISBN: 978-1-80455-759-4, eISBN: 978-1-80455-758-7
Publication date: 10 April 2023
Abstract
In view of the significant changes in the capital structure of China’s real estate industry and enterprises in recent years, this chapter employs financial indicators and the linear regression function to analyze the relationship between corporate debt ratio and the performance of 111 A-share listed real estate enterprises in China. This study finds that the corporate debt ratio of China’s real estate enterprises in the past decade has a significant negative impact on enterprises’ performance. The study also finds that among China’s real estate companies, the corporate debt ratio has a more significant negative impact on the performance of non-state-owned enterprises than state-owned enterprises. In addition, a high debt ratio has a more significant negative impact on return on equity (ROE) than on return on assets (ROA). However, when Tobin’s Q serves as a proxy for firm performance, the negative impact of the corporate debt ratio becomes insignificant in the presence of the firm size factor. The research results of this chapter can provide some reference for subsequent policy-making and investment decisions in the Chinese real estate market.
Keywords
Acknowledgements
Acknowledgments
Jianing Zhang acknowledges the financial support from the 2022 Wenzhou Philosophy and Social Science Key Research Center Program (Project No. 22jd45) and the SpF funding of Wenzhou-Kean University (SpF2021022), and the Internal Research Support Program of Wenzhou-Kean University (IRSPG202206).
Citation
Jiang, Y. and Zhang, J. (2023), "The Relationship Between Capital Structure and Performance of Real Estate Companies in China", Barnett, W.A. and Sergi, B.S. (Ed.) Comparative Analysis of Trade and Finance in Emerging Economies (International Symposia in Economic Theory and Econometrics, Vol. 31), Emerald Publishing Limited, Leeds, pp. 217-233. https://doi.org/10.1108/S1571-038620230000031028
Publisher
:Emerald Publishing Limited
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