Corporate Focus and Stock Performance: International Evidence From Listed Property Markets
Erasmus University Rotterdam (EUR) - Department of Financial Management; Erasmus Research Institute of Management (ERIM); Tinbergen Institute
Journal of Real Estate Finance & Economics, Vol. 31, No. 3
Does corporate focus translate into superior stock performance? We use 17 years of international data on 275 property companies from the U.S., British, French, Dutch and Swedish listed property share markets to answer this question. After analyzing corporate structures, we document significant differences in corporate focus strategies both between nations and firms and over time. By linking these focus profiles to risk-adjusted performance measures, we show that companies with high levels of geographical focus perform significantly better than the overall market. With regard to industrial focus, our results are mixed but again imply a positive relationship between corporate focus and stock outperformance. At the same time, our results show that the firm-specific risk of a company increases with higher levels of corporate focus. Hence, our results imply that within the real estate sector a focused strategy mildly increases both a firm's return and risk.
Keywords: Corporate focus, stock performance, industrial and geographical concentrationAccepted Paper Series
Date posted: May 3, 2005
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