On the Operating Performance of REITs Following Seasoned Equity Offerings: Anomaly Revisited

Posted: 21 Mar 2013

See all articles by Chinmoy Ghosh

Chinmoy Ghosh

University of Connecticut - Department of Finance

R. Scott Roark

Department of Marketing and Finance

C. F. Sirmans

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

Date Written: March 19, 2013

Abstract

We examine the operating performance of equity REITs following seasoned equity offerings from 1990-2007. This study uses a variety of measures of operating cash flow and documents improvements in industry-adjusted operating performance prior to issue and a statistically significant decline in these measures after issuance. The deterioration in operating performance of REITs is similar in magnitude to that found for industrial firms in prior studies. We find evidence of mean reversion in operating performance and timing by issuing firms, and that information asymmetry plays an important role in the results. Notably, in using a longer sample period and a variety of cash flow measures and benchmarks, this study finds evidence that is in contrast to those found in an earlier analysis of REIT operating performance.

Keywords: Seasoned equity offerings, Operating performance, REITs

Suggested Citation

Ghosh, Chinmoy and Roark, Robert S and Sirmans, C. F., On the Operating Performance of REITs Following Seasoned Equity Offerings: Anomaly Revisited (March 19, 2013). Journal of Real Estate Finance and Economics, Vol. 46, No. 4, 2013, Available at SSRN: https://ssrn.com/abstract=2235756

Chinmoy Ghosh

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)

Robert S Roark (Contact Author)

Department of Marketing and Finance ( email )

1910 University Drive, MS 1630
Department of Mktg and Finance
Boise, ID 83725
United States
208-426-3313 (Phone)

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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