Determinants of Capital Structure in Emerging European Economies: Evidence from Slovenian Firms

Although empirical research has shown that some capital structure differences can be explained by modern capital structure theory in mature market economies, the forces behind capital structure decisions in emerging European economies remain a puzzle. We assume that, in these countries, the change in economic system, and therefore corporate governance, has been only gradual; other forces must be at work when firms decide on their capital structures compared to those of mature market economies. After identifying possible relevant factors in Slovenian firms, we show that throughout the period from 1999 to 2006, these factors explained the greatest part of capital structure differences. However, the explanatory power of the proposed factors is changing, which implies changing corporate governance and financial behavior of Slovenian firms during transition.     

Capital Structure Determinants for Tax‐Exempt Organisations: Evidence from the UK

Abstract: This study looks into the determinants of capital structure in the absence of tax incentives. I find that attributes normally associated with debt use for taxable corporations are likewise correlated with debt use in the tax‐exempt sector. These include the organisation's age, asset tangibility, governance structure, industry grouping, liquidity, profitability, and size. Tax‐exempt sector‐specific findings indicate that debt use is also related to the size of the organisation's endowment and the amount of voluntary income. This study also demonstrates the portability of the theory of capital structure by extending the findings in Smith (2010) beyond the United States.     

Property Segment and REIT Capital Structure

This paper relies on an increasing number of industry equilibrium studies linking a firm to its industry peers to help explain the observed REIT capital structure variation within property segments beyond what is possible with the traditional partial equilibrium trade-off and pecking order theories, which assume that each firm operates in isolation from other market participants and are not particularly suitable to REITs because of the regulated setting within which these firms operate. We build several proxies for a REIT’s position within its property segment. Consistent with the competitive equilibrium model of Maksimovic and Zechner (1991), we find that a REIT’s volatility of operating performance relative to the median volatility of operating performance of its segment peers is an important determinant of its leverage ratio. We also find that a REIT’s leverage ratio depends on the median leverage ratio in its segment. Leverage is also related to a REIT’s status as an incumbent and its role as a leader in the property segment.     

Capital Structure Theory and REIT Security Offerings

In this paper, we examine the stock price reactions to announcements of new security offerings by Real Estate Investment Trusts (REITs). REITs offer a unique setting in which to study these events because they do not pay taxes at the firm level. Theory suggests that the net tax gain to corporate borrowing is unambiguously negative for a REIT. Contrary to some recent studies, however, we find a positive stock price reaction to debt offerings, while the negative equity-issuance effect is preserved. Further empirical evidence lends support to signalling as the explanation for the positive significant debt-issuance effect.     

股利税与资本结构:中国的经验证据

已有研究主要考察了企业所得税对资本结构的影响,却较少有研究探讨个人所得税对资本结构的影响,基于中国的此类研究则处于空白。我国2012年颁布的股息红利差别化个人所得税政策,将投资者的股利税与持股时间相结合。基于这一税收改革,我们发现,投资者持股时间越长(短)的企业,因为在改革之后其投资者的股利税会下降(上升),这些企业债务融资的比重显著降低(提高)。此外,股利税对资本结构的影响,在股利支付力度较大的企业更为显著。进一步,股利税对不同类型债务融资比重的影响存在差异。本文的结论不仅为"税收与公司财务"这一经典的学术领域提供了来自中国的经验证据,也补充了中国在相关学术领域的缺失。     

How Entrenchment, Incentives and Governance Influence REIT Capital Structure

Although recent literature has confirmed the importance of viewing a firm??s capital structure choices of leverage and debt maturity as jointly determined, to date there has been little analysis of the importance of traditional governance variables on a firm??s capital structure decisions using a simultaneous equations approach. We examine the influence of managerial incentives, traditional managerial monitoring mechanisms and managerial entrenchment on the capital structure of Real Estate Investment Trusts (REITs). Using panel data, we estimate a system of simultaneous equations for leverage and maturity and find that firms with entrenched CEOs use less leverage and shorter maturity debt. This is consistent with the expectation that managers acting in their own self interest will choose lower leverage to reduce liquidity risk and use short maturity debt to preserve their ability to enhance their compensation and reputations by empire building. We also find evidence that traditional alignment mechanisms such as equity and option ownership have an offsetting effect; and that firms where the founder serves as CEO choose higher leverage and longer maturity debt. The results also provide evidence that leverage and maturity are substitutes, firms with high profitability and growth opportunities use less leverage and firms with liquid assets use more leverage and longer maturity debt.     

On the Determinants of SME Cash Holdings: Evidence from Spain

Abstract:  This work analyses the factors that might explain the level of cash holdings in a sample of 860 small and medium-sized firms from Spain during the period 1996–2001. The empirical results show that firms have a target cash level to which they attempt to converge. The level of this target is higher for firms with more growth opportunities and larger cash flows. In contrast, the target level for cash holdings falls when the use of bank debt and the presence of substitutes for cash increase. Moreover, when the interest rates in the economy increase firms reduce their cash holding.     

The Determinants of Capital Structure Choice

This paper analyzes the explanatory power of some of the recent theories of optimal capital structure. The study extends empirical work on capital structure theory in three ways. First, it examines a much broader set of capital structure theories, many of which have not previously been analyzed empirically. Second, since the theories have different empirical implications in regard to different types of debt instruments, the authors analyze measures of short-term, long-term, and convertible debt rather than an aggregate measure of total debt. Third, the study uses a factor-analytic technique that mitigates the measurement problems encountered when working with proxy variables.     

The Determinants of REIT CEO Compensation

Executive compensation has garnered much attention in the last decade from both academicians and practitioners. We examine the relationship between increase in CEO compensation, industry-specific performance measures, and stock return for the years 1993–1999 in the Real Estate Investment Trust (REIT) industry. We find evidence that compensation evaluation is related to stock returns, and to changes in Real Estate Investment and Funds from Operation for the years 1997, 1998, and 1999. Furthermore, we document a negative relation between CEO raise and age. We find no link between compensation and earnings per share, whether the REIT is self-managed, or type of property in which the REIT specializes.     

Analyst Activity and Firm Value: Evidence from the REIT Sector

This paper is the first to examine (1) properties of analyst forecasts and (2) effects of analyst following on firm value for all REITs on CRSP, Compustat and I/B/E/S. Our results suggest that REITs operate in an information environment that has changed over time. We find that for periods when the REIT industry was either in the developmental stage (pre-1992), or after other structural changes in the industry (post-2000), more analysts cover REITs and forecasts are more accurate and less biased. Further, we find that mortgage REITs are more transparent than other REIT structures and exhibit properties of analyst behavior that are different from other types of REITs. Our investigation into the effect of analyst coverage on REIT value suggests that analyst coverage increases REIT value (as measured by Tobin’s q) and that the causality does not run the opposite way.

The Determinants of REIT Cash Holdings

The factors influencing the cash holdings of REITs are examined with the view that the REIT industry should yield new information regarding the drivers of corporate cash policy due to their unique operating conditions. The availability of REIT line of credit data also allows us to test the association between cash holdings and line of credit access and use. Data constraints in prior investigations have left this an unresolved empirical question in the cash holdings literature. The baseline results show that REIT cash holdings are inversely related to funds from operations, leverage, and internal advisement and are directly related to the cost of external finance and growth opportunities. Cash holdings are also negatively associated with credit line access and use. The results imply that REIT managers elect to hold little cash to reduce the agency problems of cash flow thereby increasing transparency and reducing the future cost of external capital.

On REIT CEO Compensation: Does Board Structure Matter?

In a perfect world where the board of directors is independent of CEO influence, CEO pay-for-performance compensation contracts should be a function of performance only. If the CEO can influence board structure through his ownership of company stock or chairmanship of the board, however, performance contracts are sub-optimal and agency problems arise, which allow the CEO to extract rent and demand compensation in excess of the equilibrium level. As such, models of compensation contracts must include board and ownership structure variables, in addition to the traditional economic determinants. Our analyses with REITs corroborate this notion. Our data demonstrate that the structure of REIT boards are not independent of CEO influence, and significant agency problems exist allowing the CEO to design boards that reward him at the cost of shareholder wealth. CEO compensation in REITs depends significantly on the usual economic measures of performance including firm size and return on assets; more importantly, CEO compensation is higher in REITs where the board is weak in monitoring because of large size, and older directors; the effect of a blockholder is adverse, however. This study provides additional evidence to the growing literature that observed board structures are ineffective in monitoring and governance.     

资本结构对公司治理机制的影响：来自管理报酬的证据

财务杠杆能够强化管理报酬的业绩敏感度,并优化管理报酬的激励结构。公司债务所生成的约束机制有助于改善公司治理机制,促进管理效率,减少自由现金流的代理成本,并最终实现公司价值的提升。财务杠杆对公司价值有积极效应。     

The Determinants of REIT Institutional Ownership: Tests of the CAPM

This study examines the determinants of institutional investment demand for REIT common stock. We estimate the demand function for financial institutions using the mean return and CAPM risk measures (beta and standard error) for REIT stocks. The objective is to determine whether institutional investment decisions are influenced by CAPM model attributes. In addition, we examine the predicatability of REIT institutional ownership based on the factors in our model. We employ conventional OLS forecasting techniques, as well as two neural network models in order to deal with possible nonlinearities in the relationships.     

Determinants of Capital Structure and Adjustment to Long Run Target: Evidence From UK Company Panel Data

This paper examines the empirical determinants of borrowing decisions of firms and the role of adjustment process. A partial adjustment model is estimated by GMM estimation procedure using data for an unbalanced panel of 390 UK firms over the period of 1984–1996. Our results suggest that firms have long-term target borrowing ratios and they adjust to their target ratios relatively fast, which might suggest that the costs of being away from their target ratios are significant. The results also provide support for positive impact of size, and negative effects of growth opportunities, liquidity, profitability of firms and non-debt tax shields on the borrowing decisions of companies.     

美国风险投资波动的影响因素分析

本通过建立计量经济模型，从宏观层面研究了过去26年里影响美国风险投资波动的各项因素。回归分析结果表明：第一，GDP及与之相连的资本市场表现是影响风险投资发展的长期因素；第二，风险投资的发展必须依靠私人养老基金的支持，这是一个普遍的现象；第三，资本利得税对风险投资的影响更多地是通过需求方而非供给方来实现的；第四，美国风险投资具有较强的区域性，研发费用越高的区域，风险投资数量也越多。     

Effects of monetary policy on the REIT returns: Evidence from the United Kingdom

In this paper, we analyze whether a monetary policy based on three main variables (inflation, money supply, and output gap) has a nonlinear impact on real estate investment trust (REIT) markets. In addition, we extend our analysis to examine whether these monetary policy components impact the possibility of boom and bust regimes occurring in the market. Empirically, we propose different Markov-switching model variants to determine the nonlinear time-varying impact of monetary policy on the REIT market. Our results show the monetary policy environment is supposed to affect, on one hand, the REIT returns and, on the other hand, the possibility of boom and bust markets. We prove that expansionary monetary policy has an impact only in the case of boom market. However, an increase in the inflation rate decreases the probability of remaining in the bust regime. As a consequence, we have already outlined several monetary transmission mechanisms that show house prices to have important effects on aggregate demand. Our results confirm that REIT markets are not efficient.     

资本结构影响因素实证研究综述

本文对国内外资本结构影响因素实证研究文献进行了全面、系统的回顾,着重从宏观经济因素、行业因素、公司特征因素和公司治理因素等方面进行综述,评价现有文献存在的问题和不足之处,掌握国内外研究动态,为中国上市公司资本结构问题的研究提供依据.     

Capital Structure as a Strategic Variable: Evidence from Collective Bargaining

I analyze the strategic use of debt financing to improve a firm's bargaining position with an important supplier—organized labor. Because maintaining high levels of corporate liquidity can encourage workers to raise their wage demands, a firm with external finance constraints has an incentive to use the cash flow demands of debt service to improve its bargaining position with workers. Using both firm‐level collective bargaining coverage and state changes in labor laws to identify changes in union bargaining power, I show that strategic incentives from union bargaining appear to have a substantial impact on corporate financing decisions.