Document Type
Article
Language
eng
Publication Date
2015
Publisher
Asian Real Estate Society
Source Publication
International Real Estate Review
Source ISSN
2154-8919
Abstract
This study investigates the impact of political risk on the cost of capital for publicly traded real estate firms. More specifically, by using a sample of 102 REITs and listed property trusts, which hold nearly 6,000 distinct investment properties across the Asia-Pacific region, we find strong empirical evidence that increased exposure to political risk increases both the cost of equity financing of a firm and its weighted average cost of capital. Interestingly, no such linkages are apparent between political risk and the cost of debt of a firm. These empirical results are robust to a variety of alternative measures of political risk, including a: 1) political rights index, 2) political change index, and 3) corruption perceptions index.
Recommended Citation
Cashman, George D.; Harrison, David M.; and Sheng, Hainan, "Political Risk and the Cost of Capital in Asia-Pacific Property Markets" (2015). Finance Faculty Research and Publications. 112.
https://epublications.marquette.edu/fin_fac/112
Comments
Published version. International Real Estate Review, Vol. 18, No. 3 (2015): 331-364. Permalink. © 2015 Asian Real Estate Society
George D. Cashman was affiliated with Texas Tech University at time of publication.