The Role of Financial Leverage in the Performance of Private Equity Real Estate Funds

Alcock, Jamie; Baum, Andrew; Colley, Nicholas; Steiner, Eva

doi:10.3905/jpm.2013.39.6.099

Cited by 21 publications

(22 citation statements)

References 10 publications

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“…Different studies show mix relationship between financial leverage and financial performance (see e.g. Harjoto, 2017;Zeitun and Saleh, 2015;Mishra and Modi, 2013;Alcock et al, 2013). Previous studies also show that financial leverage is associated with different variables, for example, real estate variable (Alcock et al, 2013), firm valuation (Bae et al, 2017), CSR (Mishra and Modi, 2013) and or financial performance (Goela et al, 2015).…”

Section: Moderating Effect Of Financial Leveragementioning

confidence: 99%

Corporate social responsibility investment, third-party assurance and firm performance in India

Oware

Mallikarjunappa

2019

SAJBS

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Purpose Corporate social responsibility (CSR) has evolved since the nineteenth century and is becoming mandatory for firms. However, the association between CSR and financial performance remains fluid. The purpose of this paper is to examine the mediating effect of third-party assurance (TPA) and the moderating effect of financial leverage in CSR – financial performance relationship. Design/methodology/approach Panel and hierarchical regression models are used to analyse data covering 29 companies in the Indian stock market for the period, from 2010 to 2017. Findings The study shows that CSR has a positive association with financial performance (ROA (return on assets) and ROE (return on equity)) of listed firms in India. The second finding shows that TPA has a negative association with financial performance (ROA and ROE) and negatively mediate the association between CSR and financial performance (ROA and ROE). Further, the findings also show that financial leverage has a negative association with ROA but no association with ROE, and is unable to moderate the association between CSR and financial performance. Lastly, financial leverage has no association with TPA and unable to moderate the association between CSR and TPA. Research limitations/implications The scope of the study is limited to large firms submitting sustainability reports based on the Global Reporting Initiative (GRI) guidelines, and this criterion is likely to limit the generalisation of the findings. Practical implications Capital market investors look for new markets to invest, and CSR results show a positive return for equity investors, which may encourage capital market investments in a mandatory CSR environment. The mediating effect of TPA has the potential to force managers to undertake CSR activities, which leads to a user-friendly environment and improved social sustainability. Originality/value Previous studies show a mix association between CSR and financial performance. Nevertheless, some of the possible reasons for the mix association have not received scholarly attention. Hence, the role of the mediating effect of TPA and the moderating effect of financial leverage in CSR-financial performance relationship.

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Section: Moderating Effect Of Financial Leveragementioning

confidence: 99%

Corporate social responsibility investment, third-party assurance and firm performance in India

Oware

Mallikarjunappa

2019

SAJBS

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“…Alcock et al . () examined the performance of real estate private equity funds, as reported by Property Funds Research for the period 2001–2011. They used (fixed‐effects) panel regression models to examine the effects of market conditions and the amount and timing of leverage.…”

Section: Assessing Risk‐adjusted Performance—implementationmentioning

confidence: 99%

Real Estate Returns by Strategy: Have Value‐Added and Opportunistic Funds Pulled Their Weight?

Pagliari

2017

Real Estate Economics

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Real estate strategies broadly fall into three categories: core, value‐added and opportunistic. This empirical examination of net returns from these three strategies indicates that, on a risk‐adjusted basis, the value‐added funds have strongly underperformed and the returns from opportunistic funds have weakly underperformed the returns available from core funds. In so concluding, this article departs from standard asset‐pricing models in two important respects: the total risk is used and the cost of borrowing increases as leverage increases. While the first departure has no substantive effect, the second departure lowers the estimate of the underperformance of noncore funds.

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“…The company prefers to finance their company by using the source of funds obtained from the internal company. The above mentioned by previous research conducted by Akinmulegun [23]; Alcock et al [10]; Berger and Bonaccorsi [2]. H3 = There is a leverage effect on Financial Performance…”

Section: Effect Of Leverage On Financial Performancementioning

confidence: 75%

Leverage Capability in Controlling Free Cash Flow to Improve Financial Performance

Tristiarini¹,

Pratiwi²

2018

Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017)

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Free Cash Flow, in general, being a problem for the company if it is not good in controlling. The manager can use free cash flow for actions that can harm the company. Leverage is a cost that can control the usage of free cash flow for the company's activity, which in turn can improve financial performance. The purpose of this study is to examine the role of leverage in mediating the relationship between free cash flow and financial performance. The research variable consists of Free Cash Flow as the independent variable, the Leverage as the mediator and Financial Performance as the dependent variable. The population of this research is manufacturing companies listed on the Indonesia Stock Exchange periods 2011-2015. The sampling method is purposive sampling with criteria, and the samples that meet the criterion are 70 manufacturing companies. The research model is used Warp PLS 3.0. The results show that free cash flow has an effect on financial performance, and Leverage mediates the relationships between free cash flow and financial performance. This research contribute a novelty of science in the field of management accounting, and has positive implications for companies in determining control strategies of free cash flow through the leverage could improve the financial performance.

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The Role of Financial Leverage in the Performance of Private Equity Real Estate Funds

Cited by 21 publications

References 10 publications

Corporate social responsibility investment, third-party assurance and firm performance in India

Corporate social responsibility investment, third-party assurance and firm performance in India

Real Estate Returns by Strategy: Have Value‐Added and Opportunistic Funds Pulled Their Weight?

Leverage Capability in Controlling Free Cash Flow to Improve Financial Performance

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