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  5. Unexpected Inflation, Capital Structure And Real Risk-Adjusted Firm Performance

Unexpected Inflation, Capital Structure And Real Risk-Adjusted Firm Performance

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Steiner3_Unexpected_inflation.pdf (447.05 KB)
Permanent Link(s)
https://hdl.handle.net/1813/71607
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SHA Articles and Chapters
Author
Alcock, Jamie
Steiner, Eva
Abstract

Managers can improve real risk-adjusted firm performance by matching nominal assets with nominal liabilities, thereby reducing the sensitivity of real risk-adjusted returns to unexpected inflation. The Net Asset Value (NAV) of US equity Real Estate Investment Trusts (REITs) serves as a good proxy for nominal assets and accordingly we use a sample of US REITs to test our hypothesis. We find that for the firms in our sample: (i) their real, risk-adjusted performance, and (ii) their inflation hedging qualities are inversely related to deviations from this “matching-nominals" argument. In addition to providing managers with a vehicle to maximise real, risk-adjusted performance, our findings also provide investors with the tools to infer inflation-hedging qualities of equity investments.

Date Issued
2017-06-01
Keywords
capital structure
•
inflation hedging
•
real risk-adjusted performance
•
nominal assets
•
REITs
Rights
Required Publisher Statement: © Wiley. This is the peer reviewed version of the following article: Alcock, J., & Steiner, E. (2017). Unexpected inflation, capital structure and real risk-adjusted firm performance. Abacus, 53(2) 273-298. which has been published in final form at DOI: 10.1111/abac.12102. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Type
article

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