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The Information Content of the 1999 Announcement of Funds from Operation Changes for Real Estate Investment TrustsEric James HigginsKansas State University - College of Business Administration Richard OttKansas State University - Department of Accounting Robert A. Van NessUniversity of Mississippi - Department of Finance Journal of Real Estate Research, Vol. 28, No. 3, 2006 Abstract: This study examines the market response to the 1999 announcement of a change in accounting for Funds from Operations (FFO) for Real Estate Investment Trusts (REITs). This change provides an increase in transparency in the accounting statements of REITs regarding the calculation of FFO. An analysis of this announcement finds that shareholder wealth increases but the significance of that increase is questionable. Additionally, an analysis of the adverse selection component of the bid-ask spread finds weak evidence to support the conjecture that the amount of information asymmetry in REIT prices declines after the announcement of the FFO accounting change.
Number of Pages in PDF File: 16 Keywords: Funds from Operations, FFO, REITs, real estate investment trust, bid-ask spread JEL Classification: M41, M49, L85, L11, L14, K20, K23, G34, G38 Accepted Paper SeriesDate posted: December 13, 2006Suggested CitationContact Information
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