Captive Financing Arrangements and Information Asymmetry: The Case of Reits

Posted: 23 Aug 1998

See all articles by Cheng-ho Hsieh

Cheng-ho Hsieh

Louisiana State University, Baton Rouge - E.J. Ourso College of Business Administration

C. F. Sirmans

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

Peihwang Wei

University of New Orleans - College of Business Administration - Department of Economics and Finance

Abstract

For the sample period of 1985 and 1986, captive real estate investments trusts (REITs) have a larger bid-ask spread than noncaptive REITs, after controlling for trading volume, price volatility, insider holdings, institutional holdings and firm size. Based on the bid-ask spread literature, the results suggest that captive firms are subject to a greater degree of information asymmetry. This implies a higher cost of capital for captive firms. The evidence here and the trend toward self-administered REITs imply that information asymmetry and conflicts of interests within REITs are priced.

JEL Classification: G14

Suggested Citation

Hsieh, Cheng-ho and Sirmans, C. F. and Wei, Peihwang, Captive Financing Arrangements and Information Asymmetry: The Case of Reits. Available at SSRN: https://ssrn.com/abstract=6821

Cheng-ho Hsieh

Louisiana State University, Baton Rouge - E.J. Ourso College of Business Administration ( email )

Baton Rouge, LA 70803-6308
United States

C. F. Sirmans (Contact Author)

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

Peihwang Wei

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States
(504) 280-6602 (Phone)

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