An Exploratory study of the factors that influence the capital structures of real estate firms in Kenya
Munene, Abraham Muriuki
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The dissertation is a qualitative study on the factors that influence the capital structures of real estate firms in Kenya. Real estate companies engage in either or both the following activities : assets growth which is long term and /or profit maximization which is short term. The life of real estate companies follows a life cycle similar to the product life cycle and their capital structure changes at each stage of the life cycle dependent on the time orientation of the firm. As real estate firms approach a mature phase in the life cycle, they tend to change their time orientation to incorporate both short and long-term objectives. The overall objective of this study si to understand the dynamics that influence the capital structure of real estate firms in Kenya with focus on Nairobi. The study developed a conceptual research framework and examined the main variables within it. Four research questions that related to the objective of the study were identified. A comprehensive literature review was constructed. The qualitative research related to six in-depth semi-structured interviews with respondents who were highly experienced in the real estate and financial sector in Kenya. The propositions that were outlined positively correlated with capital structure of real estate companies in Kenya. Conclusion, implications and recommendations were completed and statements and recommendations for further study made. The circular research process was completed and indicated the capital structure of real estate companies in Kenya is dynamic as it changes at each stage of the life cycle of the firm. In addition, real estate companies evolve into a hybrid companies that have both short and long term profit and growth orientations.