Explaining the variation in REIT capital structure: The role of asset liquidation value

Erasmo Giambona, John P. Harding, C. F. Sirmans

Research output: Contribution to journalArticle

39 Scopus citations

Abstract

We test the Shleifer-Vishny hypothesis that asset liquidation values influence both firm leverage and the choice of debt maturity. Using panel data on real estate investment trusts, we estimate a simultaneous equation model and find that firms specializing in the most (least) liquid assets use more (less) leverage and longer (shorter) maturities. The evidence also suggests that, for REITs, debt maturity and leverage are substitutes, consistent with the theory and predictions of Barclay, Marx and Smith.

Original languageEnglish (US)
Pages (from-to)111-137
Number of pages27
JournalReal Estate Economics
Volume36
Issue number1
DOIs
StatePublished - Mar 1 2008
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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