On The Operating Performance of REITs Following Seasoned Equity Offerings: Anomaly Revisited

We examine the operating performance of equity REITs following seasoned equity offerings from 1990–2007. This study uses a variety of measures of operating cash flow and documents improvements in industry-adjusted operating performance prior to issue and a statistically significant decline in these...

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Bibliographic Details
Published in:The journal of real estate finance and economics 2013-05, Vol.46 (4), p.633-663
Main Authors: Ghosh, Chinmoy, Roark, Scott, Sirmans, C. F.
Format: Article
Language:English
Subjects:
Abnormal returns
Analysis
Asymmetry
Capital markets
Cash flow
Dividend distributions
Economic theory
Economics
Economics and Finance
Equity
Financial Services
Industrial enterprises
Investments
Real estate
Regional/Spatial Science
REITs
Statistical analysis
Studies
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Summary:We examine the operating performance of equity REITs following seasoned equity offerings from 1990–2007. This study uses a variety of measures of operating cash flow and documents improvements in industry-adjusted operating performance prior to issue and a statistically significant decline in these measures after issuance. The deterioration in operating performance of REITs is similar in magnitude to that found for industrial firms in prior studies. We find evidence of mean reversion in operating performance and timing by issuing firms, and that information asymmetry plays an important role in the results. Notably, in using a longer sample period and a variety of cash flow measures and benchmarks, this study finds evidence that is in contrast to results found in an earlier analysis of REIT operating performance.
ISSN:0895-5638
1573-045X
DOI:10.1007/s11146-011-9344-x