Evaluating the impact of economic factors on REITs' capital structure around the world

Rovolis, Antonis; Feidakis, Andreas

doi:10.1108/jpif-08-2013-0050

Cited by 10 publications

(5 citation statements)

References 44 publications

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“…This shows that the food processing industry is able to generate returns from operations. Similarly, the firm size is also positively associated with firm value, and this is in line with the studies of Rovolis and Feidakis (2014). Further, the association of tangibility and firm value is positive and significant at the one percent level of significance, and this supports the agency cost theory, and is in support to the studies of Rajan and Zingales (1995) and Tripathy and Pradhan (2014).…”

Section: Resultssupporting

confidence: 84%

Leverage and firm performance: Empirical evidence from Indian food processing industry

Tripathy¹,

Shaik²

2020

10.5267/j.msl

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The current study examines the association between financial performance and leverage for 56 food processing firms listed in BSE over the period 2000-2018 using pooled OLS, fixed effects, and random effects models. The results indicate that leverage was significantly and positively associated with the firm performance. The results obtained are thus robust across the estimation methods. The pecking order theory and the static tradeoff theory, both seem to explain Indian food processing firms' decisions among the alternative theories of capital structure.

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Section: Resultssupporting

confidence: 84%

Leverage and firm performance: Empirical evidence from Indian food processing industry

Tripathy¹,

Shaik²

2020

10.5267/j.msl

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“…Yunus (2012) also found a cointegration between real estate market and key macroeconomic factors but concluded a shock to inflation would result in a positive response in real estate return while a shock to interest rates provides a negative real estate return response. The study was supported by Rovolis and Feidakis (2014). Goebel et al (2013) reported REIT possessing similarities with non-equity REIT in terms of return and found a great influence of interest rates on REIT returns.…”

Section: Discussion Of Findingsmentioning

confidence: 62%

REIT Financing of Real Estate Development Projects in Nigeria: Why Not?

Olanrele¹,

Said

Daud

et al. 2018

JDBE

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This study appraised the investment option of REITs directly financing real estate developments within the REIT investment guidelines in Nigeria. The focus is to grow the real estate sector of the emerging Nigeria REIT market, especially where there exists a low stock of real estate assets. Asset allocation strategy of the modern portfolio theory anchored on the Markowitz's efficient frontier model was adopted taking into consideration the REIT regulations in Nigeria. The study found that Nigeria REIT can adapt real estate financing as an option of investment diversification because of the potential return benefit exhibited with an efficient REIT portfolio of 70% real estate acquisition, 20% construction finance and 10% financial deposit asset allocation strategy, yielding a return of 8%, which was 89% higher than the 4.23% maximum return of 100% asset in real estate alone. The study provides an insight into the developing Nigeria REIT market and recommends a review of REIT law to encourage REIT investment into direct construction financing in other to grow property stock in the emerging real estate markets to a sustainable level.

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“…9. Rovolis and Feidakis (2014) analyze 334 REITs from 20 countries between 2005 and 2010 and find the determinants of REIT capital structure are similar to the predictions of corporate finance theories. Dogan et al (2019) further investigate country-specific factors and find that institutional differences such as leverage restrictions and payout requirements also influence use of leverage.…”

Section: Notesmentioning

confidence: 73%

Cash flow uncertainty and IPO underpricing: evidence from income guarantee in Thai REITs

Saengchote

Charoenpanich²

2021

JPIF

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PurposeThe purpose of this article is to investigate the relationship between cash flow uncertainty and the underpricing of real estate investment trust (REIT) initial public offerings (IPOs) using hand-collected data on income guarantee in Thailand from January 2005 to December 2019.Design/methodology/approachThis article uses linear regression to determine the relationship between underpricing (initial return) and proxy for cash flow uncertainty (income guarantee), controlling for other factors. Because issuers can use several actions to signal their quality under asymmetric information, the joint decisions are analyzed as simultaneous equations and estimated using three-stage least square (3SLS) to address potential endogeneity concern.FindingsThis article finds that underpricing, on average, is negatively related to income guarantee, which is a proxy for ex ante cash flow uncertainty. The relationship is economically and statistically significant and robust to simultaneous equations estimation. Further investigation shows that REITs with income guarantee tend to have lower systematic risk (measured by CAPM beta) and returns, making the nature of some REITs more debt-like than equity-like.Practical implicationsFor issuers, the result suggests that offering income guarantee (which is more costly for assets with lower quality) can be a useful signal of asset quality to investors and reduce IPO discount. For institutional and retail investors, the results are informative about the risk-return tradeoffs in REIT IPO investment opportunities. Income guarantees makes REIT exposure more fix income-like, so there is a need to consider the credibility of the guarantor as well.Originality/valueThis article is the first to use income guarantee as an ex ante measure of cash flow uncertainty and explicitly investigates its linkage to IPO underpricing. This aspect of uncertainty and IPO underpricing remains little-studied in the academic literature. It also contributes to the growing literature of REIT IPOs in Asia.

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Evaluating the impact of economic factors on REITs' capital structure around the world

Cited by 10 publications

References 44 publications

Leverage and firm performance: Empirical evidence from Indian food processing industry

Leverage and firm performance: Empirical evidence from Indian food processing industry

REIT Financing of Real Estate Development Projects in Nigeria: Why Not?

Cash flow uncertainty and IPO underpricing: evidence from income guarantee in Thai REITs

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