The Relationship Between Capital Structure and Performance of Real Estate Companies in China

Yitao Jiang and Jianing Zhang

A chapter in Comparative Analysis of Trade and Finance in Emerging Economies, 2023, vol. 31, pp 217-233 from Emerald Group Publishing Limited

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’sQserves 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: Firm performance; corporate debt ratio; real estate; state-owned companies; capital structure; return on assets; G32; O16 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:isetez:s1571-038620230000031028

DOI: 10.1108/S1571-038620230000031028

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