Ownership Dynamics with Multiple Insiders: The Case of Reits

34 Pages Posted: 22 Feb 2010

See all articles by Robert H. Edelstein

Robert H. Edelstein

University of California, Berkeley - Fisher Center for Real Estate and Urban Economics

Antoni Sureda-Gomila

La Caixa

Branko Urošević

affiliation not provided to SSRN

Nicholas X. Wonder

Western Washington University - College of Business & Economics

Abstract

We study ownership dynamics of multiple strategic risk-averse insiders facing a moral hazard problem. We show that, when insiders cannot commit, ex ante, to an ownership policy, the aggregate insider stake gradually declines toward the competitive market allocation. Both the speed of adjustment and the long-term equilibrium aggregate insider ownership level are greater for companies with a larger number of insiders, ceteris paribus. Using data from U.S. real estate investment trusts, we then test the model and find that the predictions of the model are verified empirically.

Suggested Citation

Edelstein, Robert H. and Sureda-Gomila, Antoni and Urošević, Branko and Wonder, Nicholas X., Ownership Dynamics with Multiple Insiders: The Case of Reits. Real Estate Economics, Vol. 38, Issue 1, pp. 57-90, Spring 2010, Available at SSRN: https://ssrn.com/abstract=1555283 or http://dx.doi.org/10.1111/j.1540-6229.2009.00254.x

Robert H. Edelstein (Contact Author)

University of California, Berkeley - Fisher Center for Real Estate and Urban Economics ( email )

Haas School of Business
Berkeley, CA 94720-1900
United States
510-643-6105 (Phone)
510-643-7357 (Fax)

Antoni Sureda-Gomila

La Caixa ( email )

Av Diagonal 629
Barcelona, 08028
Spain

Branko Urošević

affiliation not provided to SSRN

No Address Available

Nicholas X. Wonder

Western Washington University - College of Business & Economics ( email )

Department of Finance and Marketing
Bellingham, WA 98225-9071

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