A study of financial, operating and total leverage and its effect on investment decisions for selected Philippine real estate companies from years 2001 to 2010

• Main Authors: Chua, Jerrolde Joe C., Jauregi, Gabriel Lorenzo F., Lim, Jerrine Therese C., Mabolo, Elaiza Anne C.
• Format: text
• Language: English
• Published: Animo Repository 2012
• Subjects: Real estate business > Philippines; Investments > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18371
• Institution: De La Salle University

Several studies have been conducted to show the relationship between leverage and aggregate investment. Some of the inquiry concluded that leverage and investment are negatively related, where firms with higher debt ratios tend to invest less. This research analyzed the relationship of these two, with leverage divided into separate variables of financial and operating, as well as combined in the form of total leverage, in the context of listed real estate companies in the Philippines for the years 2001-2010. The primary method used in data analysis is the panel data regression, utilizing several financial ratios as independent variables in this study. Taking into account the heterogeneity of firms, the model of the equations is the least squares dummy variable model 1. The results suggest that leverage is not a significant indicator for investment decisions of real estate companies in the Philippines. However, return on assets, sales and cash flows show significant predictive power for investment decisions.