Corporate Governance and the Leverage of REITs: the Impact of the Advisor Structure
The paper examines the impact of the advisor structure on the leverage of 265 US real estate investment trusts (REITs). The study employs panel data for the period 1994 to 2010. Externally advised REITs tend to choose lower leverage, a result which differs from that of Capozza and Seguin (2000) for the old REIT era (1985-1992). We find no evidence for an agency problem related to the choice of leverage for more recent data. The lower leverage makes economic sense since externally advised REITs bear higher costs of debt than their internally advised counterparts.
Volume (Year): 35 (2013)
Issue (Month): 1 ()
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