Capital structure is the concentrated expression of the rights and obligations of enterprise stakeholders, which affects and determines the corporate governance structure and even the enterprise value. Reasonable capital structure can improve the efficiency of corporate governance, standardize corporate behavior and enhance corporate value. For a long time, the theoretical circle has never stopped discussing the relationship between capital structure and enterprise performance. The research on the relationship between capital structure and company value by modern capital structure theory has gone through the process from irrelevant to relevant. MM theory (regardless of enterprise income tax) holds that under the perfect capital market conditions, the choice of capital structure will not affect the value of the company. Since then, MM theory (considering enterprise income tax), Miller model, trade-off theory, agency cost theory, signal transmission theory, control theory and a series of capital structure theories all think that the choice of capital structure will affect the company value.
For the research on the correlation between capital structure and operating performance in China, Lu and Xin Yu (1998) conducted a multiple linear regression analysis of 35 listed companies in the machinery and transportation equipment industry in Shanghai, and found that there were significant differences in capital structure in different industries, and there was a significant negative correlation between profitability and capital structure, while factors such as scale, asset guarantee value and growth had little influence on capital structure. Li Yichao and Jiang Zhensheng (200 1) use the mixed data from 1992 to 1999, and adopt the methods of cross-sectional analysis and TSCS analysis to draw the conclusion that the capital structure of listed companies in China is negatively related to corporate performance. Yu Dongzhi (2003) found that there is a strong negative correlation between asset-liability ratio and corporate performance by studying the relationship between ownership structure, governance efficiency and corporate performance. Liu Zhibiao and others (2003) took the lead in combining industrial economics with capital structure research in China. Their research results confirm that there is a significant positive correlation between the capital structure of enterprises and the competitive intensity of their product markets, and there is a significant negative correlation between capital structure and performance. Xiao Zuoping (2005) studied the interactive relationship between capital structure and corporate performance of listed companies, and concluded that there is an interactive relationship between capital structure and corporate performance, financial leverage is negatively correlated with corporate performance, and the shareholding ratio of the largest shareholder is inverted U-shaped.
From the development of capital structure theory, except for a few studies that the capital structure of enterprises has nothing to do with performance, western theories and studies generally believe that the business performance of enterprises is positively related to the capital structure. However, there are few conclusions about China (Hong Xixi and Shen Yifeng, 2000; And, 2002), it is generally believed that the operating performance of enterprises is negatively related to the capital structure (Lu,1996; Liu Zhibiao, 2003; Yu Dongzhi, 2003; Xiao Zuoping, 2005).
Classical theory is "unaccustomed" in China, probably because of the different institutional environment. The developed capital market, strict supervision system, perfect legal system and mature manager market in the west provide fertile ground for the growth of capital structure theory, but China does not have these conditions.
Secondly, there are some differences in the selection of company performance indicators. Many scholars choose ROE to measure the company's performance. ROE is an international general index reflecting the profitability of capital, and it is also the core index in DuPont system. Its advantage is strong comprehensive ability, but its disadvantage is that it is easy to be manipulated and its effect will be affected.
Finally, the factors affecting the company's performance are not fully considered. There are many factors that affect performance, not only by capital structure, but also by industry and company scale. Omitting important factors can easily lead to biased estimation results, and even cover up the real relationship between capital structure and corporate performance. Therefore, we should add relevant control variables to the study.
Based on the above analysis, this paper takes 64 real estate listed companies in Shanghai and Shenzhen A-shares in China from 2005 to 2009 as research samples, adopts the methods of principal component analysis and linear regression, and expects to make new attempts in the establishment of research models and data selection, so as to make up for the shortcomings of the above research and verify the relationship between capital structure and company performance.
2. Theoretical analysis and research hypothesis
2. 1 Debt structure and enterprise performance
Western theory generally believes that high debt does not necessarily lead to low performance of enterprises, but the key lies in whether debt management is effective [1]. Debt affects company performance, mainly by affecting the behavior of operators. As the direct manager of an enterprise, the behavior of the operator is closely related to the performance of the company. First of all, debt is a binding creditor's right, usually paid in a fixed amount, but the principal and interest must be repaid on time, otherwise it will face the threat of litigation or even bankruptcy. Therefore, when the debt ratio of the enterprise is too high, the operator should consider reducing the free cash flow of the enterprise, so as to restrain the operator from using the excessive free cash flow of the enterprise to carry out various behaviors that are beneficial to him. Secondly, on the premise that the total amount of enterprise financing and the number of operators' shares remain unchanged, adopting debt financing is equivalent to reducing the proportion of equity financing and increasing the proportion of operators' shares, thus improving the enthusiasm of operators. Therefore, we can get:
Suppose 1: the asset-liability ratio is positively related to the business performance of the enterprise.
According to the trade-off theory, the enterprise value first increases with the increase of debt ratio. When the debt ratio reaches a certain point, the role of bankruptcy cost and agency cost is significantly enhanced, and the enterprise value begins to decline. With the increase of debt ratio, the enterprise value has a maximum, and the debt ratio at this time is the best debt ratio. Based on foreign research conclusions and classical theories, combined with the actual situation in China, this paper puts forward:
Hypothesis 2: There is an inverted U-shaped quadratic parabola relationship between enterprise performance and asset-liability ratio, that is, before the enterprise debt reaches a certain level, enterprise performance increases with the increase of debt, and when the enterprise debt exceeds a certain level, enterprise performance decreases with the increase of debt.
2.2 Ownership Structure and Enterprise Performance
Agency cost thinks that the relative concentration of equity can effectively save agency cost. Under the condition of relatively concentrated equity, the controlling shareholder has supervision and incentive, which can distract shareholders from the problem of "hitchhiking"
Large shareholders have the ability to restrain management from sacrificing shareholders' interests and seeking their own interests, and can supervise managers more effectively, thus enhancing the effectiveness of market operation and reducing managers' agency costs. In addition, because this belongs to the internal control of the company, the cost is relatively small and the governance cost is low. However, Shleifer and Vishny further put forward in 1997 that the prerequisite for major shareholders to play a good role is to have a good legal environment to protect small and medium-sized investors and prevent major shareholders from harming the interests of small and medium-sized shareholders through their control rights. However, the legal environment in China is not optimistic, and the relevant laws are incomplete and invalid, so we put forward hypothesis 3:
Hypothesis 3: The business performance of the enterprise is negatively correlated with the shareholding ratio of the largest shareholder.
From the analysis of the third chapter, we can see that there is an obvious problem of "one share dominates" in China's real estate industry. Under the special institutional background of China, the largest shareholder of listed companies is often the state holding. Although the proportion of state-owned shares has declined in recent years, the phenomenon of monopoly is still obvious. So we put forward hypothesis 4:
Hypothesis 4: Enterprise performance is negatively correlated with the proportion of state-owned shares.
3. Research and design
This paper analyzes the financial data of real estate listed companies from 2005 to 2009. In order to reduce the influence of other factors on the company's performance and ensure the validity of the research data, this paper sets the following criteria to screen the samples: (1) In order to partially eliminate the non-operating factors such as high resource value and capital reorganization of loss-making enterprises caused by the listing quota system of listed companies, ST and PT enterprises are excluded. (2) In addition, due to the unavailability or abnormality of financial data of some companies in certain years, it is also excluded.
3. 1 variable design
3. 1. 1 Determination of business performance indicators
From the analysis of the introduction, we can see that there are generally two methods to measure performance indicators. One is the performance measurement of a single indicator, such as ROA, ROE, EVA, TobinQ, etc. The other is multi-index performance measurement. At present, the methods of multi-index mainly include factor analysis, balanced scorecard and analytic hierarchy process. However, a single indicator often has certain limitations, can not fully reflect the efficiency of corporate governance, and is subjective and easy to be manipulated, thus greatly reducing the accuracy of empirical analysis. Therefore, this paper chooses a variety of indicators as the method of performance measurement, and uses factor analysis to evaluate the performance. The factor analysis of this paper selects 1 1 financial indicators to measure the performance of enterprises from four aspects: profitability, solvency, growth ability and operational ability.
3. 1.2 Determination of capital structure indicators and control variables
The capital structure studied in this paper is based on its broad definition, so it includes equity structure and creditor's rights structure. This paper selects asset-liability ratio [2], long-term debt ratio and current debt ratio as the measurement indexes of debt structure; Select the largest shareholder's equity concentration, the top ten shareholders' equity concentration and the proportion of state-owned shares to measure the ownership structure. In addition, there are some other factors that affect the business performance of enterprises. In order to control the influence of other factors, this paper introduces the company size as the control variable. See the following table for the selection of specific variables and their measurement methods:
Table 2 Index System of Real Estate Listed Companies
variable name
sign
Variable definition
Explanatory variable
Factor analysis performance
P
Measure by factor analysis
explain
changeable
creditor's rights
structure
Asset-liability ratio
Recommended daily intake
Independent variable, asset-liability ratio = total liabilities/total assets
Long-term debt ratio
Ldar
Independent variable, long-term debt ratio = long-term debt/total assets
Current debt ratio
Sdar
Independent variable, current debt ratio = current liabilities/total assets
thigh
correct
knot
build
Proportion of shares held by the top five shareholders
Hsp 10
Independent variable, the sum of the shareholding ratios of the top ten shareholders
Maximum shareholding ratio of shareholders
S 1
Independent variable, the shareholding ratio of the largest shareholder
Proportion of state-owned shares
Sp
Independent variable, proportion of state-owned shares = number of state-owned shares/total number of shares
decision variable
Company size
size
Control variable, natural logarithm of total assets at the end of the period
3.2 Research design
In order to study how the capital structure of real estate listed companies affects their operating performance, based on the previous analysis and referring to the research on capital structure at home and abroad, this paper establishes the following regression equation:
P=β0+β 1 RDA+β2 RDA？ +β3 ldar+β4 sdar+β5s 1+β6 HSP 10+β7 sp+β8 size+ε
This model is a quadratic regression model, which can test whether there is an optimal capital structure and make the financial performance of listed companies optimal, so it can provide us with the optimal combination interval between variables. Where P is the comprehensive performance index of the enterprise, RDA is the asset-liability ratio, ldar is the long-term debt ratio, sdar is the current debt ratio, s 1 is the shareholding ratio of the largest shareholder, hsp 10 is the shareholding ratio of the top ten shareholders, sp is the proportion of state-owned shares, size is the company size, and β0 is the intercept term.
4. Analysis of empirical research results
4. 1 Evaluate the business performance of the enterprise through factor analysis.
Through factor analysis, six factors that explain the variables are obtained, which are represented by Y 1, Y2, Y3, Y4, Y5 and Y6 respectively. The comprehensive measurement index P is the weighted average weight of each principal component and the variance contribution rate of each factor, and the expression is:
p =(26.479% y 1+20.42 1% Y2+ 10.224% Y3+9.202% Y4+8.825% Y5+8.47 1% Y6)/83.622%
4.2 Analysis of Regression Results of Operating Performance and Capital Structure Model
The model is regressed by the least square method, and the regression results are as follows:
Table 3 Regression parameters of the model
model
B
standard error
t
sign
(constant)
-. 18 1
.083
-2. 185
.032
S 1
-.078
.047
- 1.675
. 10 1
SDAR
.039
.028
1.37 1
. 175
size
.003
.003
1.055
.295
HSP 10
.062
.046
1.337
. 186
Recommended daily intake
.494
. 169
2.922
.005
RDA*RDA
-.362
. 155
-2.73 1
.007
LDAR
-.086
.046
- 1.859
.068
Special card
-.037
.023
- 1.687
. 1 1 1
As can be seen from the analysis results of the above table, the asset-liability ratio of enterprises is significantly positively correlated with performance; There is a significant inverted U-shaped quadratic parabola relationship between enterprise performance and asset-liability ratio; The shareholding ratio of the largest shareholder is negatively correlated with enterprise performance; The proportion of state-owned shares is negatively correlated with enterprise performance.
5. Research conclusions
(A) the enterprise has the optimal asset-liability structure.
From the above regression results, it can be seen that there is a significant downward quadratic curve relationship between the comprehensive operating performance of enterprises and the asset-liability ratio, which shows that the listed real estate companies in China do have an optimal capital structure. Generally speaking, the cost of debt is lower than the cost of equity, so borrowing can reduce the cost of capital and improve the value of enterprises. However, if there is too much debt and the repayment pressure increases, the dilemma cost and bankruptcy cost of the enterprise will increase, thus affecting the efficiency of the enterprise and reducing the value of the enterprise.
(B) Monopoly has a negative impact on enterprise performance.
From the previous analysis, it can be seen that monopoly exists in real estate listed companies in China. Shleifer and Vishny believe that the existence of major shareholders can solve the problem of insiders' control rights, but the premise for major shareholders to play a good role is to have a good legal environment to protect small and medium-sized investors and prevent major shareholders from harming the interests of small and medium-sized shareholders through their control rights. However, the legal environment in China is not optimistic, and the relevant laws are incomplete and ineffective. Therefore, "one share dominates" is not an effective measure. From an empirical point of view, the shareholding ratio of China's largest shareholder has a significant negative impact on the overall performance of enterprises.
(C) State-owned holding is not conducive to the improvement of enterprise performance
In the real estate listed companies, although the state-owned holding company has been declining, its dominance has not changed. The ownership of these shares belongs to the state, but the state cannot directly exercise ownership. Generally, the state-owned assets management department is entrusted to exercise the management right on its behalf. On the other hand, the governance structure of listed companies in China's real estate industry lacks a restraint mechanism for operators, agents are not well supervised, the business performance of enterprises is not linked to the economic interests of operators themselves, and operators do not aim at maximizing the value of enterprises. From an empirical point of view, state-owned holding has a significant negative impact on the overall performance of enterprises.