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- Title
Further Evidence on the Capital Structure of REITs.
- Authors
Harrison, David M.; Panasian, Christine A.; Seiler, Michael J.
- Abstract
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.
- Subjects
REAL estate investment trusts; CAPITAL structure; LONG-term business financing; LEASE or buy decisions; CORPORATE finance; ASSETS (Accounting); PROFITABILITY; CONJOINT analysis; MARKET timing
- Publication
Real Estate Economics, 2011, Vol 39, Issue 1, p133
- ISSN
1080-8620
- Publication type
Article
- DOI
10.1111/j.1540-6229.2010.00289.x