This study examines the determinants of real estate investment trust (REIT) capital structure decisions from 1990 to 2008. Using a broad sample of 2,409 firm-year observations, we find that asset tangibility is positively related to leverage, whereas profitability and market-to-book ratios are negatively related. Additional evidence suggests that firm debt capacity varies systematically with the unique operating and financing mechanisms employed by REITs. These results are robust across both aggregate firm debt levels and marginal security issuance decisions. Finally, our results provide further insight into competing capital structure theories, generally supporting empirical predictions derived from the market timing and trade-off theories, although failing to support pecking order theory predictions.Capital structure theorists have long debated both the relative merits of the use of debt and equity to finance a firm's operations, as well as the distortions the use of borrowed money introduces into the firm's investment policies. Historically, the optimal capital structure has been viewed as that mix of debt and equity claims which optimizes the trade-off between the tax-advantaged nature of debt financing and the associated increase in the potential costs of financial distress. At the same time, the investment distortions include problems of underinvestment and asset substitution. More recently, the focus of these discussions has broadened to include alternative explanations of firm leverage decisions, such as the pecking order theory and market timing hypothesis.Interestingly, most empirical studies exploring these relationships explicitly exclude real estate investment trusts (REITs) and other regulated firms from their analyses. Although valid reasons exist to justify (and perhaps necessitate) this exclusion, with a market capitalization that topped $438 billion by the end of 2006, a closer investigation and better understanding of the capital *

This study examines underwater primary resident homeowners to identify why some decide to strategically default while others do not. We find that realized shame and guilt are consistent with ex ante expectations. However, the financial backlash experienced by strategic defaulters is less than anticipated, causing strategic defaulters not to regret their actions. State‐specific bankruptcy exemption levels and real estate laws only marginally explain the decision to strategically default, partly because the decision to walk away from a mortgage is emotional, and partly because the implementation of these laws is uncertain and confusing to distressed borrowers. Rather, we find key strategic default drivers include the homeowner's expectation of future real estate price movements, frustration with the lender, moral evaluation of the decision to strategically default, loan knowledge, political ideology, gender, income and age.

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