Determinants of capital structure in European listed real estate

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dc.contributor Aalto-yliopisto fi
dc.contributor Aalto University en
dc.contributor.advisor Niskanen, Jaakko Johansson, Kenneth 2015-06-23T11:12:34Z 2015-06-23T11:12:34Z 2015-06-08
dc.description.abstract This thesis examines the capital structure decisions of European listed real estate companies, more exactly Real Estate Investment Trusts (“REIT”) and Real Estate Operating Companies (“REOC”). Based on capital structure theory this study identifies the determinants of the rela-tionship between equity and debt. Further, this study investigates whether there are differ-ences in the observed capital structures of the two types of European listed real estate com-panies and explores the factors that influence capital structure. All this is done by identifying the target firm characteristics that influence managers’ capital structure decisions, using pan-el data methodology on the companies that constitute the EPRA/NAREIT European REIT and non-REIT indices 2007-2013. The examined variables include profitability, growth, tangibility, size, asset turnover and cost of debt. The research questions are divided into one main re-search question and four sub-questions. They are formulated as follows: • What are the determinants for capital structure in European listed real estate? (main question) • Are the operating preconditions the same for all types of property companies? • What are the theoretical suggestions for the behavior of capital structure? • Does capital structure differ between REITs and REOCs? • Do the capital structure determinants differ between REITs and REOCs? The results show that REITs carry less debt than REOCs, on average. This is mainly due to the tax-exempt status of REITs. The results also indicate a negative relationship between lev-erage and profitability. Also a negative relationship is found between leverage and growth. Tangibility and cost of debt are found to be positively correlated with leverage. The results do confirm the pecking order theory and the trade-off model. Also, the results show that the de-terminants for REITs and REOCs behave differently and that the determinants themselves vary. en
dc.format.extent 52 + 3
dc.language.iso en en
dc.title Determinants of capital structure in European listed real estate en
dc.type G2 Pro gradu, diplomityö en Insinööritieteiden korkeakoulu fi
dc.subject.keyword capital structure en
dc.subject.keyword leverage en
dc.subject.keyword listed real estate en
dc.subject.keyword REIT en
dc.subject.keyword REOC en
dc.identifier.urn URN:NBN:fi:aalto-201506303304
dc.programme.major Real Estate Investment and Finance fi
dc.programme.mcode M3009 fi
dc.type.ontasot Master's thesis en
dc.type.ontasot Diplomityö fi
dc.contributor.supervisor Viitanen, Kauko
dc.programme Master’s Programme in Real Estate Economics fi

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