Property in corporate financial statements: The UK evidence

Abstract

Summary This paper investigates the role of property in corporate financial statements. Whilst in practice the majority of non‐property companies in the service industry acknowledge the importance of property in the delivery of their main function, little is known of the importance of intensity value of property (i.e. the proportion of total tangible assets represented by property in a company's asset structure) in corporate financial management. This seems to be inconsistent with the fact that property is a sizable corporate asset in the balance sheets of UK service sector companies. Using financial statement data of companies in four UK ‘property‐intensive’ (non‐property) sectors, this research has adequately exposed the interaction of a corporation's property asset intensity with the overall financial structure of the firm. Our empirical results therefore support the USA findings that real estate plays an important role in corporations’ financial statements although in the UK it is a relatively under‐r...