Debt Conservatism and Debt-Equity Choices: Evidence from REITs’ Unused Debt Capacity

Authors

  • Woei-Chyuan Wong Universiti Utara Malaysia, Malaysia

DOI:

https://doi.org/10.32890/ijbf2017.13.1.1

Keywords:

Capital structure, Financial flexibility, Unused debt capacity, REIT

Abstract

We infer debt conservatism behavior by examining how REITs adjust towards their debt capacity following a capital issue or repurchase decision. It is observed that REITs with high unused debt capacity tend to issue equity which renders them more underleveraged for at least two consecutive years. These high debt buffer REITs also tend to converge slowly towards their debt capacity through repurchase decisions and hold significantly higher unused debt facilities than their low buffer counterparts. These findings are robust to a variety of robustness checks and cannot be explained by the traditional pecking order and trade-off theories of capital structure.

 

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Published

15-03-2018

Issue

Vol. 13 No. 1 (2017): International Journal of Banking and Finance (IJBF) Vol. 13, No.1, 2017

Section

Articles

How to Cite

Wong, W.-C. (2018). Debt Conservatism and Debt-Equity Choices: Evidence from REITs’ Unused Debt Capacity. International Journal of Banking and Finance, 13(1), 1-28. https://doi.org/10.32890/ijbf2017.13.1.1

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Harvested 2026-09-22
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Identifiers DOI 10.32890/ijbf2017.13.1.1 OpenAlex W7055622893

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