THE ROLE OF CAPITAL STRUCTURE DETERMINANTS IN ASIAN LISTED PROPERTY COMPANIES

Abstract

This study aims to provide insights regarding the role of capital structure determinants to existing and potential investors of Asian listed property companies. This is done so by exploring the role of capital structure determinants in 197 Asian listed property corporations, categorised into i) Developed and Emerging economies and ii) different principal business activities (i.e. Property Development, Property Investment and Hybrid) over a sample period from 2003-2012. In addition, this study also explores the changes of the role of these capital structure determinants over i) time (i.e. 2003-2007 and 2008-2012) and as a result of ii) significant global events (i.e. 2008 Global Financial Crisis). The five main determinants of capital structure investigated are Firm Size, Profitability, Asset Tangibility, Growth Opportunities and Non-Debt Tax Shield. This paper also adopts various proxies of the dependent variable, leverage and the independent variables to test the robustness of findings. It is found that the role of capital structure determinant differs for Developed and Emerging economies, individual countries and across different business activities. The role of the capital structure is also seen to change across time and during the 2008 Global Financial Crisis. From the results of the robustness tests, only Firm Size or Profitability appears to be robust to varying leverage proxies while Profitability, Asset Tangibility and Non-Debt Tax Shield seem robust to modified measures of the independent variables.