The Determinants of Capital Structure in Real Estate Investment Trusts
Year: 2011
Type: preprint
Abstract: In this paper, I attempt to explain REITs borrowing behavior. With the absence of tax-deductibility advantage, several non-tax-driven benefits of leverage induce REITs managers to issue debt. Accordingly, I diagnose the relative importance of several non-tax-driven benefits of leverage in deriving the capital structure decisions of REITs. Consistent with the pecking order theory of leverage, REITs with higher existing investment use more debt; REITs with higher profitability issue less debt; and REITs with higher expected investment use less debt. I conclude that REITs managers issue debt mainly to avoid issuing equity and to maximize wealth of existing
Source: SSRN Electronic Journal
Author: Yasser Alhenawi
Institution: University of Evansville
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2208683404