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作者

Timothy Riddiough;Eva Steiner

来源

REAL ESTATE ECONOMICS,Vol.48,Issue1,P.200-239

语言

英文

关键字

作者单位

School of Business, University of Wisconsin‐Madison, 5262D Grainger Hall, Madison, WI 53705;School of Hotel Administration, Cornell SC Johnson College of Business, 465B Statler Hall, Ithaca, NY 14853

摘要

Using equity Real Estate Investment Trust data, we show empirically that the use of unsecured debt, which contains standardized covenants that place limits on total leverage and the use of secured debt, is associated with lower leverage outcomes. We then show that firm value is sensitive to leverage levels, where lower leverage is associated with higher firm value. In the presence of weak managerial governance, our results suggest that unsecured debt covenants function as a managerial commitment device that preserves the firm's debt capacity to enhance financial flexibility.