Capital Structure Theory: Evidence from European Property Companies' Capital Offerings
This study examines the stock price reactions on announcements of both equity and debt offerings by European property companies. The unique setting in which corporate tax rates vary between different countries enables us to test established theories in the field of capital structure. In accordance with theory, we find a negative price reaction on equity offering announcements, which is less severe for low-tax countries and positive price reactions on the announcements of debt offerings. Besides tax arguments, we also test alternative explanations by analyzing variations in stock reactions based on differences in the relative size of the issue, the pre-offer leverage, the underlying property types, and operational performance. The results show that corporate taxation, issue size, and operational performance are significant explanatory factors in the negative price reactions. Copyright 2001 by the American Real Estate and Urban Economics Association.
Year of publication: |
2001
|
---|---|
Authors: | Brounen, Dirk ; Eichholtz, Piet M.A. |
Published in: |
Real Estate Economics. - American Real Estate and Urban Economics Association - AREUEA. - Vol. 29.2001, 4, p. 615-632
|
Publisher: |
American Real Estate and Urban Economics Association - AREUEA |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Corporate Real Estate and Corporate Takeovers: International Evidence
Brounen, Dirk, (2008)
-
Capital Structure Theory: Evidence from European Property Companies' Capital Offerings
Brounen, Dirk, (2001)
-
Corporate Real Estate Ownership Implications: International Performance Evidence
Brounen, Dirk, (2005)
- More ...