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Kapitalstruktur och finansieringsstrategi: Hur resonerar fastighetsbolag kring finansieringsbeslut utifrån teorier om kapitalstruktur?
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
2022 (Swedish)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesisAlternative title
Capital structure and financing strategy : What is the reasoning behind real estate companies’ financial decisions based on capital structure theories? (English)
Abstract [en]

Background and problem discussion

Real estate companies have higher debt-to-equity ratios in comparison to companies in other industries. In practice real estate companies accumulate an abundance of debt, which is a result of tax benefits when debt is issued. The consequence of having a high debt-to-equity ratio is higher risk and can create financial distress for the company in question. Real estate companies that generally have a plentitude of tangible assets are not indifferent to this. Pecking order and Trade off theory are both theories regarding capital structure which tackle the issue of debt-to-equity ratio. There have been many studies where these theories have been applied to both theoretical and empirical scenarios, yet there is ambiguity on what is applicable in the real estate industry practically.

Purpose

The objective of this study is to examine the reasoning behind financing decisions of real estate companies with regards to capital structure theories.

Method

A qualitative study was performed by having semi-structured interviews with six listed Swedish real estate companies. The data gathered from the aforementioned interviews is presented under the Empiri heading. The data collected are complemented with a comparison study of the companies´ key figures. This material is further analyzed to conclude which theory is the most significant in the real estate industry. Excluding the empirical data collected during the interviews, there is theoretical data which has been accumulated and presented under the Teori heading. 

Results and conclusion 

The results indicate that although the capital structure of real estate companies reflects a combination of both the Pecking order- and Trade off theory, there are other components that determine the structure. Overall, the companies in the study have similar priorities regarding their financial means, however one company particularly stands out. This company prioritizes newly issued shares as a form of currency when making acquisitions. This strategy preserves both the company's stock price and liquidity. The study also revealed that real estate companies have different investment opportunities depending on their existing assets and client base, and this should be considered when designing a dividend policy.

Place, publisher, year, edition, pages
2022. , p. 62
Keywords [en]
Capital structure, Pecking order theory, Trade off theory, Debt-to-equity ratio, Market-to-book ratio
National Category
Business Administration
Identifiers
URN: urn:nbn:se:lnu:diva-115905OAI: oai:DiVA.org:lnu-115905DiVA, id: diva2:1690022
Subject / course
Business Administration - Management Accounting
Educational program
Business Administration and Economics Programme, 240 credits
Supervisors
Examiners
Available from: 2022-08-29 Created: 2022-08-24 Last updated: 2022-08-29Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • ieee
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  • vancouver
  • Other style
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Language
  • de-DE
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  • en-US
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  • nn-NO
  • nn-NB
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  • Other locale
More languages
Output format
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  • text
  • asciidoc
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