The capital structure determinants of REITs. Is it a peculiar industry?

Morri, Giacomo; Beretta, Christian

doi:10.1108/17539260810891488

Cited by 56 publications

(61 citation statements)

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“…Earnings volatility or operating risk has mainly has a negative impact upon the debt ratio, supporting Trade-off Theory. Amongst numerous others, Booth et al (2001), Morri and Beretta (2008), and Chikolwa (2009) have found this result, whereas Wiwattanakantang (1999) found mixed results.…”

Section: Empirical Findings Of Capital Structure Determinants Used Inmentioning

confidence: 69%

Determinants of Capital Structure of A-Reits and the Global Financial Crisis

Zarebski

Dimovski

2012

Pacific Rim Property Research Journal

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This paper contributes to the capital structure literature by investigating the determinants of capital structure of Australian Real Estate Investment Trusts (A-REITs) over the period [2006][2007][2008][2009]. By using a panel approach and a Global Financial Crisis (GFC) dummy variable, our analysis incorporates the Global Financial Crisis (GFC) shock which appears to have affected the market after December 2007. We find that A-REIT size, profitability, tangibility, operating risk and number of growth opportunities impact similarly to many previous studies of international entities upon the degree of leverage. We also find mixed support for prevailing capital structure theories of Pecking Order, Trade-off and Agency Theory, but find that Market Timing Theory can be rejected over our sample period. With specific focus after onset of the GFC, we find that the relationship between capital structure and our independent variables is somewhat distorted. Consequently, the postulations of theory also become distorted whereby changes to capital structure come about because of the primary goal to survive, rather than managerial opportunism.

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Section: Empirical Findings Of Capital Structure Determinants Used Inmentioning

confidence: 69%

Determinants of Capital Structure of A-Reits and the Global Financial Crisis

Zarebski

Dimovski

2012

Pacific Rim Property Research Journal

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“…Research has demonstrated that capital structure choice varies significantly across industries (Morri and Beretta, 2008;Feng et al, 2007). Property industry is unique in different industries in terms of capital structure choice, because property companies have more collateral (real estate assets) to deal with larger amounts of debt, and usually have higher leverage ratios.…”

Section: Introductionmentioning

confidence: 99%

An explanation of capital structure of China's listed property firms

Liang

Li²,

Song

2014

Property Management

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -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.

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“…Many theoretical studies and much empirical research have addressed these issues, but there is not yet a fully supported and unanimously accepted theory [5]. Indeed, what makes the capital structure debate so exciting is that only a few of the developed theories have been tested by empirical studies and the theories themselves lead to different, not mutually exclusive and sometimes opposed, results and conclusions.…”

Section: Introductionmentioning

confidence: 99%