Financing Constraints and Investment Efficiency in Canadian Real Estate and Construction Firms: A Stochastic Frontier Analysis

This article models the behavior of 179 listed and unlisted real estate construction firms (RECFs) in Canada to study how financial constraints impact investment efficiency these during 2004–2020 period. Investment is interpreted here as ability ease a firm convert opportunities into actual investments. The results show that Canadian RECFs are strongly dependent on two sources financing: equity financing debt financing. Equity helped due cash flow increase but was unlikely decrease uncertainty follow-up investments companies. constructed an index (IEI) for all RECF firms. showed rate loss approximately 62% above IEI has demonstrated descending pattern, level slipped from 0.47 0.40 2004 2020. Furthermore, regional analysis demonstrates compared with located Ontario, indices Quebec British Columbia were more volatile. Small very steady trend sample period, which completely different patterns displayed by large medium RECFs.