房地产投资信托的资金结构(英文原文).pdf

On the Capital Structure of Real Estate Investment Trusts In general, the received theory on capital structure can be categorized into two broad classes, one of optimization where managers trade off the costs against the benefits of debt, and the other behavioral where managerial decision making is influenced by market‘s perception of managers‘ superior information, and the overall condition of the market which may occasionally present windows of opportunity to sell securities at a premium. Optimization of the Costs and Benefits of Debt—Tradeoff Theory Tradeoff theory posits that a target debt ratio exists which is determined by the tradeoff between the costs and benefits of debt, with the firm‘s assets and investment plans held constant. The most significant benefit of debt financing is the interest tax shield. Mandatory interest payment also reduces free cash flow which mitigates the agency conflict between security-holders and managers. Since profitable firms have higher income to shield, and greater free cash flow, theory predicts higher leverage for profitable firms, and the opposite for firms with investment opportunities that are perceived to be risky. The cost of financial distress is the major detriment of debt. Factors that mitigate bankruptcy risk include firm‘s access to fixed assets as collateral, and greater profit potential. For example, high (low)-growth firms that are more sensitive to fluctuations in business outlook and are therefore more vulnerable due to the costs of financial distress, choose lower (higher) leverage ratio. Smith and Watts (1992) and Barclay, Morella, and Smith (2003) report evidence consistent with this notion. Titman and Wessel (1988) find that debt ratio is negatively related to the ‗uniqueness‘ of a firm‘s line of business, and Rajan and Zingal