Performance of the Swedish Real Estate Sector 1998-2002
AbstractIn this paper, we analyze the performance of the Swedish real estate sector by various profitability measures. We use an unbalanced panel of 781 non-listed companies from 1998 to 2000 with 3421 observations. There exists large regional and sectorial differences in performance but it is not due to regional or sectorial effect. Rather those differences can be largely explained by capital structure, tangibility and turnover of the firm, etc. We use both a single equations and a simultaneous equations approach to control for endogeneity and simultaneity. In the simultaneous equations framework we find a positive and significant effect capital structure on performance. Performance has a larger and significant effect on capital structure. The results indicate that banks and financial institutions lend more to profitable firms and firms with more tangible assets than otherwise. Tangible assets as ‘inventory’ contribute negatively to performance after taking into account the effect of capital structure on performance. We can conclude that tangible assets contribute to the profitability of a firm up to a point as collateral for bank loans. However, excessive tangible assets are negatively related to the profitability, at least for the shorter term. Our results stand the same even after controlling for regional differences and sub sectorial differences.
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Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 124.
Length: 27 pages
Date of creation: 28 Jan 2004
Date of revision:
Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC
Real Estate; Sweden; Panel Data; Performance; Simultaneous Equations;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
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