Capital Structure: A Swedish Real Estate Study

Abstract: This thesis aims to explain the choice of capital structure in Swedish listed real estate firms during the period 1995-2004 from the perspective of conventional capital structure theory. The two main theories used are the pecking order- and trade-off theory. The fundamental of the pecking order theory is that manager’s capital structure decisions are influenced by the market perceptions of managers’ superior information. The trade-off theory provides evidence for that manager’s trade off between costs and benefits of debt. We find that the pecking order theory seems to dominate the trade-off theory in order to explain the choice of capital. The firms included in our dataset are Castellum, FastPartner, Heba, Hufvudstaden, Kungsleden, Ljungberggruppen, Tornet, Wallenstam and Wihlborgs.