Capital Structure and Political Risk in Asia-Pacific Real Estate Markets

Posted: 22 Jun 2016

See all articles by George D. Cashman

George D. Cashman

Marquette University; Texas Tech University

David M. Harrison

UCF; Texas Tech University

Michael Seiler

College of William and Mary - Finance

Date Written: June 21, 2016

Abstract

This study investigates the determinants of capital structure decisions by real estate firms, with a specific focus on the impact of political risk on leverage. Using a sample of Asia-Pacific REITs and listed property trusts, we find those firms with properties located in countries characterized by relatively high degrees of political risk, such as political instability, and/or greater uncertainty in the ability to repatriate and monetize profits from international investment activities, employ less debt than their counterparts operating in more politically stable environments. This core finding remains robust to alternative sample selection criteria including the division of the sample into high versus low market-to-book value firms, and also holds within the subset of organizations that are active in raising capital in the secondary markets.

Keywords: Capital Structure; Political Risk; Asia-Pacific REITs

Suggested Citation

Cashman, George D. and Harrison, David M. and Seiler, Michael, Capital Structure and Political Risk in Asia-Pacific Real Estate Markets (June 21, 2016). Journal of Real Estate Finance and Economics, Vol. 53, No. 2, 2016. Available at SSRN: https://ssrn.com/abstract=2798708

George D. Cashman

Marquette University ( email )

College of Business Administration
P.O. Box 1881
Milwaukee, WI 53201-1881
United States
4142881448 (Phone)

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

David M. Harrison

UCF ( email )

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

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Michael Seiler (Contact Author)

College of William and Mary - Finance ( email )

VA
United States

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

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