Information Asymmetry and REIT Capital Market Access

Journal of Real Estate Finance and Economics, July 2019, Volume 59, Issue 1, pp 90–110

Posted: 14 Sep 2019 Last revised: 18 Sep 2019

See all articles by Erik Devos

Erik Devos

University of Texas at El Paso - College of Business Administration - Department of Economics and Finance

Seow‐Eng Ong

National University of Singapore (NUS)

Andrew C. Spieler

Hofstra University - Department of Finance

Date Written: July 28, 2019

Abstract

REITs hold relatively little cash and access capital markets often due to their favorable dividend tax status. The transparent nature of REITs, in theory, implies low information asymmetry. However, we present evidence that this phenomenon is temporal. We find that information asymmetry is relatively low when REITs access the capital market, when compared to non-accessing periods, based on bid-ask spreads for a large number of REITs. Further, we find that REIT size and turnover affect bid-ask spreads, but the pattern of lower bid-ask spreads surrounding capital market access does manifest itself when we investigate subsamples, dependent on size and turnover. Our findings are consistent with the idea that REITs increase their disclosure when they access the capital market, which in turn lowers information asymmetry.

Keywords: REIT; Information Asymmetry; IPO; SEO; Bid-ask Spreads

Suggested Citation

Devos, Erik and Ong, Seow‐Eng and Spieler, Andrew, Information Asymmetry and REIT Capital Market Access (July 28, 2019). Journal of Real Estate Finance and Economics, July 2019, Volume 59, Issue 1, pp 90–110. Available at SSRN: https://ssrn.com/abstract=3444508

Erik Devos (Contact Author)

University of Texas at El Paso - College of Business Administration - Department of Economics and Finance ( email )

500 W. University Ave.
El Paso, TX 79968
United States
915 747 7770 (Phone)

HOME PAGE: http://utminers/utep.edu/hdevos

Seow‐Eng Ong

National University of Singapore (NUS)

Bukit Timah Road 469 G
Singapore, 117591
Singapore

Andrew Spieler

Hofstra University - Department of Finance ( email )

Hempstead, NY 11550
United States

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