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Capital market supply and REITs’ financing and investment decisions

Author

Listed:
  • Qing Bai
  • Qingqing Chang
  • Avis Devine

Abstract

Purpose - – In the wake of the recent financial crisis, there has been extensive commentary regarding the rise and fall of REIT leverage, how much debt REITs should use, and the trendy “deleveraging” practice among REIT managers. The paper aims to discuss these issues. Design/methodology/approach - – Identifying the late 2000s credit crunch as a supply shock, the paper uses difference-in-difference methodology to isolate alternative firm financing strategies and investment decision responses to the shock. Findings - – Consistent with corporate survey results, this empirical analysis suggests that changes in capital structure are largely supply driven, and REIT managers “time” the debt market in response to credit conditions. Originality/value - – This research clarifies the causes of the documented leverage pattern and provides fresh insights about REIT capital structure.

Suggested Citation

  • Qing Bai & Qingqing Chang & Avis Devine, 2014. "Capital market supply and REITs’ financing and investment decisions," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 10(2), pages 146-167, April.
    • Handle: RePEc:eme:ijmfpp:v:10:y:2014:i:2:p:146-167
    DOI: 10.1108/IJMF-11-2012-0119
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    Citations

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    Cited by:

    1. Muhammad Arif Khan & Xuezhi Qin & Khalil Jebran & Abdul Rashid, 2020. "The Sensitivity of Firms’ Investment to Uncertainty and Cash Flow: Evidence From Listed State-Owned Enterprises and Non-State-Owned Enterprises in China," SAGE Open, , vol. 10(1), pages 21582440209, January.

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