Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/223901
Title: IMPACT OF CORPORATE REAL ESTATE ON FINANCIAL LEVERAGE
Authors: NG WEI LIN
Keywords: Real Estate
RE
Liow Kim Hiang
2014/2015 RE
Financial Leverage
Corporate Real Estate
Capital Structure
Issue Date: 12-Dec-2014
Citation: NG WEI LIN (2014-12-12). IMPACT OF CORPORATE REAL ESTATE ON FINANCIAL LEVERAGE. ScholarBank@NUS Repository.
Abstract: The attention on real estate ownership has shifted beyond the traditional belief of being a secondary asset, to one known as a strategic asset. For business firms, the presence of property assets could mean that firms have an option to strategically utilize the real estate to meet certain business and financial objectives. This research examines the relationship between property asset holdings and financial leverage for non-real estate firms listed in Singapore. It contributes to the extensive research of corporate real estate (CRE) locally and globally. To date, little has been done on how real estate can influence firms’ debt ratios in great detail. This research attempts to study the profile of CRE and fill the research gap by investigating the relationship between firms’ property ownership and financial leverage in Singapore. Real estate is often mortgaged as collateral for loans. This study hypothesizes a positive correlation between property holdings and financial leverage. Two measures of property holdings and two measures of financial leverage are introduced to test the relationship and the results reveal a consistent positive impact of property assets on financial leverage. The positive correlation affirms that there is an incentive for business firms with higher property holdings, in terms of the greater capacity to borrow, which can be unfavourable to shareholders. In addition, this study establishes evidence that the positive relationship between property assets and financial leverage remains strong regardless of pre-during and post crisis. This research also provides a basis to show the differing degree of impact properties have on financial leverage across the seven business sectors. Lastly, this study can serve as a guide for managers to maintain healthy financial leverage by changing the level of property holdings.
URI: https://scholarbank.nus.edu.sg/handle/10635/223901
Appears in Collections:Bachelor's Theses

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