The debt maturity structure of UK property companies

Joseph Ooi ()

Journal of Property Research, 1999, vol. 16, issue 4, 293-307

Abstract: This paper investigates the corporate debt maturity structure of property companies quoted in the UK over the period 1989-95. The empirical results show that there is scope for property firms to signal to the market their true worth using their debt maturity decisions. In particular, the evidence shows that property companies with potential good news employ more short-term debt in their capital structure, which is consistent with the signalling hypothesis. The study also reveals that firms which are large, enjoy high returns, or are more focused on property trading employ more long-term debt in their capital structure. The evidence is also consistent with the conventional notion that property companies match their debt maturity to the life of the assets. The matching practice, however, is not done primarily on the basis of minimizing the agency costs of long-term debt. The empirical results are also consistent with the traditional notion that managers time their long-term debt issues based on the prevailing real estate market condition and their expectation of future interest rate movements. The evidence weakly suggests that property companies defer their long-term debt issues when interest rates are predicted to fall in the near future. Interest rate volatility, however, do not appear to have any significant influence on the debt maturity policy of property companies.

Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://hdl.handle.net/10.1080/095999199368058 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jpropr:v:16:y:1999:i:4:p:293-307

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJPR20

DOI: 10.1080/095999199368058

Access Statistics for this article

Journal of Property Research is currently edited by Bryan MacGregor

More articles in Journal of Property Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().