On the Determinants of REIT Capital Structure: Evidence from Around the World

Journal of Real Estate Finance and Economics, Forthcoming

Posted: 11 Nov 2019

See all articles by Yunus Yasin Dogan

Yunus Yasin Dogan

affiliation not provided to SSRN

Chinmoy Ghosh

University of Connecticut - Department of Finance

Milena T. Petrova

Bocconi University

Date Written: October 30, 2019

Abstract

Using a sample of REITs from twelve countries around the world, we examine the determinants of REIT capital structure. We investigate firm-specific and country-specific factors, and account for the unique legal requirements that REITs face in each country. Our results suggest that legal requirements are significant determinants of the capital structure of REITs. Specifically, we find that REITs have the highest book debt ratio in countries where they must pay out most of their operating income. This result implies that REITs prefer debt financing to equity financing. Additionally, we find that in countries with no payment requirement, but leverage restrictions, REITS have lower book leverage, which suggests that internal financing is preferred to external financing. Our findings also indicate that country-specific factors do not have significant impact on REIT leverage.

Suggested Citation

Dogan, Yunus Yasin and Ghosh, Chinmoy and Petrova, Milena T., On the Determinants of REIT Capital Structure: Evidence from Around the World (October 30, 2019). Journal of Real Estate Finance and Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3478127

Yunus Yasin Dogan

affiliation not provided to SSRN

Chinmoy Ghosh

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-486-3040 (Phone)
860-486-0349 (Fax)

Milena T. Petrova (Contact Author)

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

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