Further Evidence on the Capital Structure of REITs

Posted: 23 Aug 2010 Last revised: 30 Sep 2010

See all articles by David M. Harrison

David M. Harrison

UCF; Texas Tech University

Christine Panasian

University of Richmond

Michael Seiler

College of William and Mary - Finance

Multiple version iconThere are 2 versions of this paper

Date Written: August 20, 2010


This study examines the determinants of REIT capital structure decisions from 1990-2008. Using a broad sample of 2,409 firm-year observations, we find that asset tangibility is positively related to leverage, while profitability and market-to-book ratios are negatively related. Additional evidence suggests 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, while failing to support pecking order theory predictions.

Keywords: REITs, Capital Structure, Debt Capacity

Suggested Citation

Harrison, David M. and Panasian, Christine and Seiler, Michael, Further Evidence on the Capital Structure of REITs (August 20, 2010). Real Estate Economics, Vol. 39, 2010. Available at SSRN: https://ssrn.com/abstract=1662743

David M. Harrison (Contact Author)

UCF ( email )

Orlando, FL 32816-1400
United States
407-823-1127 (Phone)

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Christine Panasian

University of Richmond ( email )

28 Westhampton Way
Richmond, VA 23173
United States

Michael Seiler

College of William and Mary - Finance ( email )

United States

HOME PAGE: http://mason.wm.edu/faculty/directory/seiler_m.php

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