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Full-Text Articles in Business
Leverage Strategies Of Asian Reits And Real Estate Operating Companies, Kian Guan Lim, Tien Foo Sing
Leverage Strategies Of Asian Reits And Real Estate Operating Companies, Kian Guan Lim, Tien Foo Sing
Research Collection Lee Kong Chian School Of Business
The real estate literature has been puzzled by the story of why a tax-exempt vehicle like REITs uses more debt than equity. We used empirical evidence on REITs and real estate operating companies (REOCs) in Japan, Singapore, and Hong Kong from 2006 to 2010 and verified that REITs did use more debt than REOCs, despite borrowing constraints imposed on REITs in Hong Kong and Singapore. REITs also used more short-term debt to finance their real estate investment activities, but their total debt level declined during the crisis periods in 2007 and 2008. We found that higher long-term debt reduced the …
The Risk-Relevance Of Securitizations During The Recent Financial Crisis, Yiwei Dou, Yanju Liu, Gordon Richardson, Dushyantkumar Vyas
The Risk-Relevance Of Securitizations During The Recent Financial Crisis, Yiwei Dou, Yanju Liu, Gordon Richardson, Dushyantkumar Vyas
Research Collection School Of Accountancy
We investigate changes in the risk-relevance of securitized subprime, other nonconforming, and commercial mortgages for sponsor-originators during the recent financial crisis. Using the volatility of realized stock returns, option-implied volatility, and credit spreads, we observe a pronounced increase in the risk-relevance of subprime securitizations as early as 2006. Furthermore, reflecting the evolution of the financial crisis in waves, we find that investors recognized the increased credit risk of other nonconforming and commercial mortgage securitizations as the financial crisis progressed. Additional analyses show that risk-relevance varies cross-sectionally with structural characteristics such as monoline credit-enhancement and the presence of special servicers for …