REIT Dividend Policies and Dividend Announcement Effects During the 2008-2009 Liquidity Crisis

Real Estate Economics, September 2012

Posted: 26 Apr 2011

See all articles by Brad Case

Brad Case

Fannie Mae

William G. Hardin

Florida International University (FIU) - College of Business Administration

Zhonghua Wu

Florida International University (FIU)

Date Written: April 25, 2011

Abstract

REIT dividend policies and dividend announcement effects during the 2008-2009 liquidity crisis are examined. Multinomial logit results indicate that REITs with higher market leverage or lower market-to-book ratios are more likely to cut dividends, suspend dividends, or pay elective stock dividends. These results imply that mitigating going-concern risk is an important motive for REITs adjusting dividend policies during the crisis and support dividend catering theory where investor demand for dividends impacts corporate dividend policies. Moreover, REITs that cut or suspend dividends experience positive cumulative abnormal returns during the post dividend announcement period, controlling for the potential influence from simultaneous FFO announcements. The positive market response over the post announcement period supports the notion that dividend decisions convey information to investors (Brav et al., 2005) and is also consistent with the broad catering theory of dividend policy.

Keywords: REIT Dividend Policies and Dividend Announcement Effects

Suggested Citation

Case, Bradford and Hardin, William G. and Wu, Zhonghua, REIT Dividend Policies and Dividend Announcement Effects During the 2008-2009 Liquidity Crisis (April 25, 2011). Real Estate Economics, September 2012, Available at SSRN: https://ssrn.com/abstract=1822391

Bradford Case

Fannie Mae ( email )

3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
United States
202-752-4221 (Phone)

William G. Hardin (Contact Author)

Florida International University (FIU) - College of Business Administration ( email )

Miami, FL 33199
United States

Zhonghua Wu

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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