Exploring the existence of optimal capital structure and its effects on tax arbitrage and shareholder value creation in the Philippine Real Estate Industry

Date of Publication


Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Accountancy

Subject Categories



Ramon V. Del Rosario College of Business



Thesis Adviser

Florenz C. Tugas

Defense Panel Member

Aeson Luiz C. Dela Cruz

Alger C. Tang

Alloysius Joshua S. Paril


One of the main drivers of growth in the business environment is the real estate industry nonetheless, several participants are short-lived. The aforementioned concerns serve as a motivation for the researchers to examine the existence of an optimal capital structure with reference to six firm-specific characteristics as determinants in a panel data regression of 35 firms for a five-year span (2009 2013). Additionally, path analysis is used in order to have stronger claims on the causal effects of the determinants to the optimal capital structure and thereof to shareholder wealth this purports to examine the possibilities surrounding a firm adaption of the optimal capital structure. Referencing from the above claims, this research is both exploratory and explanatory in design. As for the findings, all six variables are evidenced to have causal effects on the optimal financing mix of a firm. Accordingly, firms are found to have higher tendencies in maximizing share price with their optimal capital structure. Lastly, the results of this study proposes a management tool to enhance effectivity and efficiency upon influencing the movements in share price with the order of priority appearing as follows: growth opportunity, size, profitability, family firm, non-debt tax shield, and debt tax shield, with only debt tax shield found to discourage debt financing.

Abstract Format






Accession Number


Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

ix, 232 leaves : illustrations (some colored) ; 28 cm. + ; 1 computer optical disc.


Real estate business--Taxation--Philippines; Real property and taxation--Philippines

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