Financing Constraints and Investment Efficiency of Canadian Real Estate and Construction Firms: A Stochastic Frontier Analysis
Dec 31, 2019
Published in: Working in progress based on Reviewers Comments
Publisher: Working in progress based on Reviewers Comments
This article investigates the financing constraints and investment efficiency of Canadian real estate and construction firms (RECFs) using a stochastic frontier approach. Our results support the observation that Canadian RECFs have a strong dependence of using both equity financing and debt financing and debt financing is likely to reduce the uncertainty of future financing while equity financing might enlarge the uncertainty. Regional analysis shows that the investment efficiency level of RECFs located in British Columbia (BC) was significantly higher than those RECFs located in other provinces. Small size RECFs demonstrated a very robust ascending trend in the investment efficiency despite the impact of Global Financial Crisis.