Contagion and REIT Stock Prices

Posted: 28 Dec 1998

See all articles by Chinmoy Ghosh

Chinmoy Ghosh

University of Connecticut - Department of Finance

Randall S. Guttery

University of North Texas - Department of Finance, Insurance Real Estate and Law

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law

Abstract

This article investigates the contagious movement of real estate investment trust (REIT) stock prices in response to real estate news related to financial institutions= real estate portfolios. The basic hypothesis is that because real estate assets are traded infrequently, the market has incomplete information about their true value; thus, REIT stock prices react negatively to announcements of poorly performing real estate portfolios of financial institutions. Consistent with the hypothesis, significantly negative reactions to these announcements are found for a portfolio of sixty-nine REITs during the real estate crisis of 1989?91.

JEL Classification: E31

Suggested Citation

Ghosh, Chinmoy and Guttery, Randall S. and Sirmans, C. F., Contagion and REIT Stock Prices. Available at SSRN: https://ssrn.com/abstract=137841

Chinmoy Ghosh (Contact Author)

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-486-3040 (Phone)
860-486-0349 (Fax)

Randall S. Guttery

University of North Texas - Department of Finance, Insurance Real Estate and Law ( email )

Denton, TX 76203
United States
940-565-3073 (Phone)
940-565-4234 (Fax)

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law ( email )

Tallahasse, FL 32306
United States
850 644-4076 (Phone)

HOME PAGE: http://www.cob.fsu.edu/rmi

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