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A Capital Structure Financial Analysis and Unmeasured Effect of each Countries Regime: the Real Estate Companies (REITS)

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  • Antonios Rovolis
  • Konstantinos Liapis
  • Stella Spilioti

Abstract

This article investigates the capital structure of Real Estate companies (REITS) and how it is connected with key financial ratios. Financial analysis provides significant insight of the company capital structure. Existing financial models accumulate the dynamics of different key factors that enhance or diminish the capabilities of a company to extend the debt finance. Previous literature review in trade-off theory, pecking order theory, agency costs and market timing hypothesis postulate the relation of capital structure with several financial measurements. The contribution of this research is to link debt to capital ratio with independent variables, which are important within the real estate business context. Panel data analysis of an adequate sample, from 2005 to 2010, of 371 international listed real estate companies’, materialize our assumptions of this linkage of debt ratio. The unmeasured effect of each countries regime is inherited into the equation with the incorporation of dummy variables. This valuation methodology is an easy accessible tool for professionals and practitioners engaged in real estate business.

Suggested Citation

  • Antonios Rovolis & Konstantinos Liapis & Stella Spilioti, 2014. "A Capital Structure Financial Analysis and Unmeasured Effect of each Countries Regime: the Real Estate Companies (REITS)," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 57-71.
  • Handle: RePEc:ers:ijebaa:v:ii:y:2014:i:3:p:57-71
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    File URL: http://www.ersj.eu/repec/ers/pijeba/14_3_p5.pdf
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    References listed on IDEAS

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    1. Rocha, Katia & Salles, Luciana & Garcia, Francisco Augusto Alcaraz & Sardinha, Jose A. & Teixeira, Jose P., 2007. "Real estate and real options -- A case study," Emerging Markets Review, Elsevier, vol. 8(1), pages 67-79, March.
    2. Fischer, Edwin O & Heinkel, Robert & Zechner, Josef, 1989. " Dynamic Capital Structure Choice: Theory and Tests," Journal of Finance, American Finance Association, vol. 44(1), pages 19-40, March.
    3. Rajan, Raghuram G & Zingales, Luigi, 1995. " What Do We Know about Capital Structure? Some Evidence from International Data," Journal of Finance, American Finance Association, vol. 50(5), pages 1421-1460, December.
    4. Eckbo, B Espen & Giammarino, Ronald M & Heinkel, Robert L, 1990. "Asymmetric Information and the Medium of Exchange in Takeovers: Theory and Tests," Review of Financial Studies, Society for Financial Studies, vol. 3(4), pages 651-675.
    5. David C. Ling & Andy Naranjo, 1999. "The Integration of Commercial Real Estate Markets and Stock Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(3), pages 483-515, September.
    6. Harris, Milton & Raviv, Artur, 1990. " Capital Structure and the Informational Role of Debt," Journal of Finance, American Finance Association, vol. 45(2), pages 321-349, June.
    7. Konstantinos J. Liapis, 2010. "The Residual Value Models: A Framework for Business Administration," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 83-102.
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    Cited by:

    1. Ioannis Gasteratos & Michael Karamalis & Andreas Koutoupis & Ioannis Filos, 2016. "Earnings Management in Greece: A Case Study in Construction Sector Using Jones Model," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 3-16.
    2. Christina Whidya Utami & Mochammad Ferdiansah, 2017. "Development of Knowledge Management Model in Establishing Innovation and Company Performance in UMKM/ SME1 in Indonesia," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 655-665.
    3. Christos L. Galanos, 2017. "Stress Testing the Effect of Income Tax Scale on a Full Time Agricultural Income in Greece After the New Tax Legislation," European Research Studies Journal, European Research Studies Journal, vol. 0(4A), pages 684-695.
    4. Galina Alekseevna Bunich & Elina Ildarovna Abdyukova & Anna Aleksandrovna Sysoeva & Vladimir Sergeevich Akopov, 2017. "Bank Factoring: Russian and International Practice," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 334-349.
    5. Waluyo Waluyo, 2017. "Firm Size, Firm Age, and Firm Growth on Corporate Social Responsibility in Indonesia: The Case of Real Estate Companies," European Research Studies Journal, European Research Studies Journal, vol. 0(4A), pages 360-369.

    More about this item

    Keywords

    Capital structure; financial ratios; REITs;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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