REIT Capital Structure Choices: Preparation Matters

dc.contributor.authorPavlov, Andrey
dc.contributor.authorSteiner, Eva
dc.contributor.authorWachter, Susan
dc.description.abstractSun, Titman, and Twite (2015) find that capital structure risks, namely high leverage and a high share of short-term debt, reduced the cumulative total return of US REITs in the 2007-2009 financial crisis. We find that mitigating capital structure risks ahead of the crisis by reducing leverage and extending debt maturity in 2006, was associated with a significantly higher cumulative total return 2007-2009, after controlling for the levels of those variables at the start of the financial crisis. We further identify two systematic cross-sectional differences between those REITs that reduced capital structure risks prior to the financial crisis and those that did not: the exposure to capital structure risks and the strength of corporate governance. On balance, our findings are consistent with the interpretation of risk-reducing adjustments to capital structure ahead of the crisis as a component of managerial skill and discipline with significant implications for firm value during the crisis.
dc.description.legacydownloadsSteiner2_REIT_capital_structure.pdf: 285 downloads, before Aug. 1, 2020.
dc.rightsRequired Publisher Statement: © Wiley. This is the pre-peer reviewed version of the following article: Pavlov, A., Steiner, E. & Wachter, S. (2016). REIT capital structure choices: Preparation matters. Real Estate Economics. doi: 10.1111/1540-6229.12155. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
dc.subjectreal estate investment
dc.subjectfinancial crisis
dc.titleREIT Capital Structure Choices: Preparation Matters
local.authorAffiliationPavlov, Andrey: Simon Fraser University
local.authorAffiliationSteiner, Eva: Cornell University School of Hotel Administration
local.authorAffiliationWachter, Susan: University of Pennsylvania


Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
416.02 KB
Adobe Portable Document Format