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An explanation of capital structure of China's listed property firms
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.ORCID iD: 0000-0003-4849-0726
2014 (English)In: Property Management, ISSN 0263-7472, Vol. 32, no 1, 4-15 p.Article in journal (Refereed) Published
Abstract [en]

Purpose: The purpose of this paper is to investigate the determinants of the capital structure of listed property firms in China.Design/methodology/approach: The study is based on quantitative methods such as dynamic panel data models and a panel data set containing financial and accounting data for all listed property companies from 2006 to 2010 in China. Findings: The findings confirm that the state-own shares, the fixed asset values, the total size of assets and profitability have a positive and significant impact on the leverage ratio of listed property firms in China. The negative impact of the tax shields and the currency ratio, and significant impact of state-own shares on capital structure cannot be explained by existing capital structure theory but the unique property market regulation environment and market conditions in China. Research limitations/implications: The findings confirm the applicability of trade-off theory (except for the correlation between leverage and the tax shield) on property companies in China. They also highlight the importance of government policies and special market conditions in explaining the financing behaviour of property companies in transaction countries like China. Practical implications: Complimentary policies should be established along with property market restriction policies to offset their unequal negative effect on property companies with less state-owned shares. Furthermore, government should invest efforts to eliminate the discrimination credit treatment of banks against property companies with non-existent or few state-owned shares. Originality/value: The special financial behaviour of China's property firms and the unique financial and property market conditions highlight the necessity of researching the capital structure of listed property firms in China. However, most of the existing literature focuses on the company financial behaviour in developed countries, and very few studies have been done concerning property firms' financing behaviour in emerging economies such as China, and this research prospects to fill this blank.

Place, publisher, year, edition, pages
2014. Vol. 32, no 1, 4-15 p.
Keyword [en]
Capital structure, China, Dynamic panel data models, Listed property company
National Category
Economics and Business
URN: urn:nbn:se:kth:diva-142990DOI: 10.1108/PM-02-2013-0012ScopusID: 2-s2.0-84893477807OAI: diva2:705166

QC 20140314

Available from: 2014-03-14 Created: 2014-03-14 Last updated: 2014-03-14Bibliographically approved

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