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WHAT A HARD DECISION: CAPITAL STRUCTURE OF REITS IN ISTANBUL STOCK EXCHANGE

Year 2023, Volume: 7 Issue: 1, 84 - 95, 30.03.2023

Abstract

By examining the factors that determine the capital structure for Turkish Real Estate Investment Trusts
(REITs) in Borsa Istanbul (BIST) over the period 2014-2020, we attempt to present a contribution to
the capital structure literature. In our study, we use panel data analysis that provide us proofs about
the impact of financial performance, stock performance, and corporate structure on capital structure
decisions of REITS. Some of the findings are remarkably similar to those of prior studies in this
array of literature while our independent variables and capital structure may seem to be connected
differently from the leading capital structure theories (“pecking order theory and trade-off theory”).
The prominent capital structure theories of pecking order and trade-off theory likewise receive mixed
support, although the link between capital structure and our independent variables appears to be
skewed. As a result, the theory’s assumptions indicate that capital structure changes are driven by
survival.

References

  • Antoniou, A., Guney, Y. & Paudyal, K. (2008). The Determinants of Capital Structure: Capital Market- Oriented versus Bank-Oriented Institutions, Journal of Financial and Quantitative Analysis, 43 (1), 59-92.
  • Baltagi, B. H. (2001). Econometric analysis of panel data. (2nd ed.). United Kingdom: John Wiley&Sons, Ltd.
  • Bessler, W., Drobetz, W. & Kazemich, R. (2011). Factors affecting capital structure in H. Baker and G. Martin (eds), Capital Structure and Corporate Financing Decisions, Hoboken, NJ: John Wiley & Sons.
  • Bevan, A. & Danbolt, J. (2002). Capital Structures and its Determinants in the UK-a Decompositional Analysis. Applied Financial Economics, 12(3), 159-170.
  • Booth, L. V. A., Demirguc-Kunt, A. & Maksimovic, V. (2001). Capital structures in developing countries. Journal of Finance, 56(1), 87-130.
  • Chen, L. & Zhau, X. (2004). Profitability, Mean Reversion of Leverage Ratios and Capital Structure Choices. Michigan State University and Kent State University, Working Paper. Available at: http://ssrn.com/ abstract=614082.
  • Damodaran, A. (2001). Corporate finance: Theory and Practice. New York: John Wiley and Sons.
  • Deesomsak, R., Paudyal, K., & Pescetto, G. (2004). The determinants of capital structure: Evidence from the Asia Pacific Region. Journal of Multinational Financial Development, 14(4-5), 387-405.
  • Guner, A. (2016). The determinants of capital structure decision: new evidence from Turkish companies. Procedia Economics and Finance, 38, 84–89.
  • Huang, G., & Song, F. M. (2006). The determinants of capital structure: Evidence from China. China Economic Review, 17(1), 14-36.
  • Khaki, A. R., & Akin, A. (2020). Factors affecting the capital structure: New evidence from GCC countries. Journal of International Studies, 13(1), 9-27.
  • Kraus, A., & Litzenberger, R. H. (1973). A State‐Preference Model Of Optimal Financial Leverage. The Journal of Finance, 28(4), 911-922.
  • Li, K., Yue, H., & Zhao, L. (2009). Ownership, institutions, and capital structure: Evidence from China. Journal of Comparative Economics, 37(3), 471-490.
  • MacKay, P., & Phillips, G. M. (2005). How Does Industry Affect Firm Financial Structure? The Review of Financial Studies, 18(4), 1433-1466.
  • Marsh, P. (1982). The Choice Between Equity and Debt: An Empirical Study. The Journal of Finance, 37(1), 121-144.
  • Matias, F. & Serrasqueiro, Z. (2017). Are There Reliable Determinant Factors of Capital Structure Decisions? Empirical Study of SMEs in Different Regions of Portugal. Research in International Business and Finance, 40, 19–33.
  • Mocnik, D. (2001). Asset Specificity and a Firm’s Borrowing Ability: An Empirical Analysis Of Manufacturing Firms. Journal of Economic Behavior & Organization, 55, 69-81.
  • Modigliani, F. & Miller, M. H. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review, 48(3), 261-281.
  • Myers, S. C. (1984). The capital structure puzzle. The journal of finance, 39(3), 574-592.
  • Prasad, D., Dheeriya, P. L. & Woodruff, C. (2002). A Comparative Study of the Capital Structure of Indian Firms with the Firms of Developing European and Asian Countries. www.sbaer.uca.edu/ research/1999/WDS/99wds196.htm.
  • Rajan, R. G. & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. The Journal of Finance, 50(5), 1421-1460.
  • Sayilgan, G., Karabacak, H., & Kuçukkocaoglu, G. (2006). The Firm-specific Determinants of Corporate Capital Structure: Evidence from Turkish Panel Data. Investment Management and Financial Innovations, 3(3), 125–139.
  • Sayilgan, G. & Uysal, B. (2011). Türkiye Cumhuriyet Merkez Bankası Sektörel Bilançoları Kullanılarak Sermaye Yapısını Belirleyen Faktörler Üzerine Bir Analiz: 1996 – 2008. Ankara Üniversitesi SBF Dergisi, 66(4), 101-124.
  • Titman, S. & Wessels, R. (1988). The Determinants of Capital Structure Choice. Journal of Finance, 43(1), 1-19.
  • Wald, J. K. (1999). How firm characteristics affect capital structure: an international comparison. Journal of Financial research, 22(2), 161-187.
  • Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. London: The MIT Press.
  • Tatoglu, F. Y. (2012). Panel veri ekonometrisi. İstanbul: Beta Yayınları.
Year 2023, Volume: 7 Issue: 1, 84 - 95, 30.03.2023

Abstract

References

  • Antoniou, A., Guney, Y. & Paudyal, K. (2008). The Determinants of Capital Structure: Capital Market- Oriented versus Bank-Oriented Institutions, Journal of Financial and Quantitative Analysis, 43 (1), 59-92.
  • Baltagi, B. H. (2001). Econometric analysis of panel data. (2nd ed.). United Kingdom: John Wiley&Sons, Ltd.
  • Bessler, W., Drobetz, W. & Kazemich, R. (2011). Factors affecting capital structure in H. Baker and G. Martin (eds), Capital Structure and Corporate Financing Decisions, Hoboken, NJ: John Wiley & Sons.
  • Bevan, A. & Danbolt, J. (2002). Capital Structures and its Determinants in the UK-a Decompositional Analysis. Applied Financial Economics, 12(3), 159-170.
  • Booth, L. V. A., Demirguc-Kunt, A. & Maksimovic, V. (2001). Capital structures in developing countries. Journal of Finance, 56(1), 87-130.
  • Chen, L. & Zhau, X. (2004). Profitability, Mean Reversion of Leverage Ratios and Capital Structure Choices. Michigan State University and Kent State University, Working Paper. Available at: http://ssrn.com/ abstract=614082.
  • Damodaran, A. (2001). Corporate finance: Theory and Practice. New York: John Wiley and Sons.
  • Deesomsak, R., Paudyal, K., & Pescetto, G. (2004). The determinants of capital structure: Evidence from the Asia Pacific Region. Journal of Multinational Financial Development, 14(4-5), 387-405.
  • Guner, A. (2016). The determinants of capital structure decision: new evidence from Turkish companies. Procedia Economics and Finance, 38, 84–89.
  • Huang, G., & Song, F. M. (2006). The determinants of capital structure: Evidence from China. China Economic Review, 17(1), 14-36.
  • Khaki, A. R., & Akin, A. (2020). Factors affecting the capital structure: New evidence from GCC countries. Journal of International Studies, 13(1), 9-27.
  • Kraus, A., & Litzenberger, R. H. (1973). A State‐Preference Model Of Optimal Financial Leverage. The Journal of Finance, 28(4), 911-922.
  • Li, K., Yue, H., & Zhao, L. (2009). Ownership, institutions, and capital structure: Evidence from China. Journal of Comparative Economics, 37(3), 471-490.
  • MacKay, P., & Phillips, G. M. (2005). How Does Industry Affect Firm Financial Structure? The Review of Financial Studies, 18(4), 1433-1466.
  • Marsh, P. (1982). The Choice Between Equity and Debt: An Empirical Study. The Journal of Finance, 37(1), 121-144.
  • Matias, F. & Serrasqueiro, Z. (2017). Are There Reliable Determinant Factors of Capital Structure Decisions? Empirical Study of SMEs in Different Regions of Portugal. Research in International Business and Finance, 40, 19–33.
  • Mocnik, D. (2001). Asset Specificity and a Firm’s Borrowing Ability: An Empirical Analysis Of Manufacturing Firms. Journal of Economic Behavior & Organization, 55, 69-81.
  • Modigliani, F. & Miller, M. H. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review, 48(3), 261-281.
  • Myers, S. C. (1984). The capital structure puzzle. The journal of finance, 39(3), 574-592.
  • Prasad, D., Dheeriya, P. L. & Woodruff, C. (2002). A Comparative Study of the Capital Structure of Indian Firms with the Firms of Developing European and Asian Countries. www.sbaer.uca.edu/ research/1999/WDS/99wds196.htm.
  • Rajan, R. G. & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. The Journal of Finance, 50(5), 1421-1460.
  • Sayilgan, G., Karabacak, H., & Kuçukkocaoglu, G. (2006). The Firm-specific Determinants of Corporate Capital Structure: Evidence from Turkish Panel Data. Investment Management and Financial Innovations, 3(3), 125–139.
  • Sayilgan, G. & Uysal, B. (2011). Türkiye Cumhuriyet Merkez Bankası Sektörel Bilançoları Kullanılarak Sermaye Yapısını Belirleyen Faktörler Üzerine Bir Analiz: 1996 – 2008. Ankara Üniversitesi SBF Dergisi, 66(4), 101-124.
  • Titman, S. & Wessels, R. (1988). The Determinants of Capital Structure Choice. Journal of Finance, 43(1), 1-19.
  • Wald, J. K. (1999). How firm characteristics affect capital structure: an international comparison. Journal of Financial research, 22(2), 161-187.
  • Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. London: The MIT Press.
  • Tatoglu, F. Y. (2012). Panel veri ekonometrisi. İstanbul: Beta Yayınları.
There are 27 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Makaleler
Authors

Vijdan Uğurluay This is me 0000-0001-7713-2317

Aslı Aybars This is me 0000-0002-7899-2367

Publication Date March 30, 2023
Published in Issue Year 2023 Volume: 7 Issue: 1

Cite

APA Uğurluay, V., & Aybars, A. (2023). WHAT A HARD DECISION: CAPITAL STRUCTURE OF REITS IN ISTANBUL STOCK EXCHANGE. Journal of Research in Economics, 7(1), 84-95.