Financial flexibility and security issuance decisions
This paper examines the roles of financial flexibility in firms’ security issuance decisions.Focusing on Asian Real Estate Investment Trusts (REITs) that are subject to regulatory debt limit, we construct a direct proxy to financial flexibility measured as the difference between debt limit and actu...
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| Format: | Conference or Workshop Item |
| Language: | English |
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2014
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| Online Access: | https://repo.uum.edu.my/id/eprint/11581/1/F.pdf |
| _version_ | 1825802853922373632 |
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| author | Wong, Woei Chyuan |
| author_facet | Wong, Woei Chyuan |
| author_sort | Wong, Woei Chyuan |
| collection | UUM |
| description | This paper examines the roles of financial flexibility in firms’ security issuance decisions.Focusing on Asian Real Estate Investment Trusts (REITs) that are subject to regulatory debt limit, we construct a direct proxy to financial flexibility measured as
the difference between debt limit and actual debt ratio.This unused debt capacity or
buffer measures financial flexibility as it
indicates how much additional debt a REIT
can issue.REITs maintain significant
debt buffer in their balance sheet
which equals to 25% of the total assets.This buffer has been relatively stable
during the 10 years study period indicating a conservative debt policy being adopted by REITs in our sample.Controlling for investment policy, we find that REITs’ security issuance decisions are influenced by its debt buffer in a manner consistent with financial flexibilities hypotheses where
REITs with larger (smaller) unused debt capacity are more likely to issue marginal debt(equity) in the next period. The drop
in debt buffer due to marginal debt issuance is swiftly replenished in the following six months period after the issuance. |
| first_indexed | 2024-07-04T05:47:24Z |
| format | Conference or Workshop Item |
| id | uum-11581 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T05:47:24Z |
| publishDate | 2014 |
| record_format | eprints |
| spelling | uum-115812016-04-18T08:03:00Z https://repo.uum.edu.my/id/eprint/11581/ Financial flexibility and security issuance decisions Wong, Woei Chyuan HG Finance This paper examines the roles of financial flexibility in firms’ security issuance decisions.Focusing on Asian Real Estate Investment Trusts (REITs) that are subject to regulatory debt limit, we construct a direct proxy to financial flexibility measured as the difference between debt limit and actual debt ratio.This unused debt capacity or buffer measures financial flexibility as it indicates how much additional debt a REIT can issue.REITs maintain significant debt buffer in their balance sheet which equals to 25% of the total assets.This buffer has been relatively stable during the 10 years study period indicating a conservative debt policy being adopted by REITs in our sample.Controlling for investment policy, we find that REITs’ security issuance decisions are influenced by its debt buffer in a manner consistent with financial flexibilities hypotheses where REITs with larger (smaller) unused debt capacity are more likely to issue marginal debt(equity) in the next period. The drop in debt buffer due to marginal debt issuance is swiftly replenished in the following six months period after the issuance. 2014-06-04 Conference or Workshop Item NonPeerReviewed application/pdf en https://repo.uum.edu.my/id/eprint/11581/1/F.pdf Wong, Woei Chyuan (2014) Financial flexibility and security issuance decisions. In: 16th Malaysian Finance Association Conference (MFA2014), 4 - 6 June 2014, Sasana Kijang Central Bank of Malaysia, Kuala Lumpur. (Unpublished) http://umconference.um.edu.my/ |
| spellingShingle | HG Finance Wong, Woei Chyuan Financial flexibility and security issuance decisions |
| title | Financial flexibility and security issuance
decisions |
| title_full | Financial flexibility and security issuance
decisions |
| title_fullStr | Financial flexibility and security issuance
decisions |
| title_full_unstemmed | Financial flexibility and security issuance
decisions |
| title_short | Financial flexibility and security issuance
decisions |
| title_sort | financial flexibility and security issuance decisions |
| topic | HG Finance |
| url | https://repo.uum.edu.my/id/eprint/11581/1/F.pdf |
| work_keys_str_mv | AT wongwoeichyuan financialflexibilityandsecurityissuancedecisions |