Navigating the Capital Structure Maze : Firm Performance for the Nordic Real Estate Market : An Empirical Study of the Relationship between Capital Structure and Firm Performance
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- Master Thesis 
This thesis aims to evaluate the relationship between capital structure and firm performance for Nordic real estate firms. More specifically the thesis aims to answer the research questions (l) "Does the capital structure of Nordic real estate firms affect firm performance in the sector?" and (2) "Can the three dependent variables used in capital structure on firm performance: ROA, ROE and Tobin's Q describe the fluctuation in market value during the last decade?". The thesis includes quarterly data for 59 listed companies from Ql 2006 to Q4 2022 for Norway, Sweden and Denmark. And seek to resolve these questions by implying a fixed-effect estimation using cluster robust standard errors. Consistent with prior research and theory, we found a significant relationship for: LTD ( - ) ,STD( - ) , Si z e (+) , Tangibility(-), Growth(+) , Ag e ( + ) and the Covid pandemic(-). Our findings suggest that the dependent variables used as a proxy for firm performance in capital structure literature: ROA, ROE and Tobin's Q, do not describe the fluctuations in the market value of Nordic real estate firms during the last decade. Since a fall in real estate value often correlates with a fall in market value for real estate firms, the mechanism contradicts its implications on ROE, ROA and Tobin's Q as ROE denotes total assets, ROA, Tobin's Q the measures increases with a decrease in property prices.