THE CAPITAL STRUCTURE DECISIONS OF LISTED REAL ESTATE FIRMS: EVIDENCE FROM THE ASIA-PACIFIC REGION

Abstract

This dissertation purports to study the financial leverage levels and capital structure determinants of Asia-Pacific (APAC) listed real estate firms in both developed and emerging markets, with the scope of study covering a 10-year period from 2007 to 2016. Analysis of data from property firms in 3 developed (DC) and 4 emerging countries (EM) reveals how the debt-equity structure of firms is influenced by the various firm-specific attributes in different markets and within the region.

For the sample as a whole, the evidence shows that firm size, growth opportunities, asset tangibility, liquidity and profitability exhibit statistical significance. Further, only firm size is positively related to the use of debt while the other four variables have a reverse influence. When the set of developed countries are examined separately from emerging ones, not only do EM and DC firms show similar results, the findings are also almost identical to the full sample. In the sub-period analyses involving two different 5-yearly periods, it was found that the financing patterns of DC firms have little variations over the last decade, unlike that of EM firms where more than half of the variables do not share the same relationship in the respective sub-periods.

All in all, this paper has laid some groundwork to explore the determinants of capital structure of APAC-listed real estate companies upon which a more detailed evaluation could be based.