Reit Open-Market Stock Repurchases and Profitability
Posted: 6 Aug 2009
Date Written: August 5, 2009
This study examines whether the announcement of REIT open-market stock repurchase programs contain information content about future operating performance over the period 1990-2001. We find no evidence that REIT stock buybacks are positively related to the operating performance. In fact, the operating performance of our sample REIT firms peak at the repurchase announcement year and deteriorate in the years following the announcement of share repurchases. Nevertheless, the sample REITs show higher levels of post-repurchase operating performance when compared to those of the pre-repurchase period. Additionally, our regression analysis shows that changes in future operating performance can explain the positive announcement effect.
Keywords: REITs, stock repurchases, profitability
JEL Classification: G14, G35
Suggested Citation: Suggested Citation