Information Asymmetry and REIT Capital Market Access

Devos, Elizabeth; Devos, Erik; Ong, Seow Eng; Spieler, Andrew C.

doi:10.1007/s11146-018-9678-8

Cited by 20 publications

(15 citation statements)

References 37 publications

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“…There are several studies that examine the effects of transparency or information asymmetry on REIT capital market access or investment. For instance, Devos et al (2019) find that information asymmetry of REITs is relatively low when they access the capital markets, using a measure based on bid-ask spreads. Their results suggest that REITs increase their disclosure when they plan to raise capital from the external capital markets, which in turn reduces the information asymmetry of REITs.…”

Section: The Related Literature On Reit Debt Financingmentioning

confidence: 99%

“…Thus, arguably the information asymmetry problems are still relevant to REITs. Moreover, extant studies show that information asymmetry can be temporal for REITs (Devos et al, 2019) and greater transparency facilitates REIT firm growth (An et al, 2011). Hence, it is interesting to examine how ESG disclosure is related to firm value of REITs given the information asymmetry issues of REITs.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

ESG Disclosure, REIT Debt Financing and Firm Value

Feng

2021

J Real Estate Finan Econ

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Section: The Related Literature On Reit Debt Financingmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

ESG Disclosure, REIT Debt Financing and Firm Value

Feng

2021

J Real Estate Finan Econ

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“…And more frequent trips to the capital markets, researchers argue, should increase financial disclosure and decrease information asymmetry (Ghosh et al, 2000b ; Ott et al, 2005 ). Empirical results in Devos et al ( 2019 ) support the idea that information asymmetry, based on bid-ask spread, falls when REITs access capital markets.…”

Section: Part 2: Public Marketsmentioning

confidence: 88%

Information Frictions in Real Estate Markets: Recent Evidence and Issues

Broxterman

Zhou

2022

J Real Estate Finan Econ

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“…We also include two information-asymmetry proxies in the analysis. The first is the daily bid-ask spread of a REIT’s stock, following Silber ( 2005 ) and Devos et al ( 2019 ). The second is analyst forecast dispersion of a REIT’s FFO, as the dispersion of an analyst’s earnings forecast could be a proxy for differences of opinion that result from asymmetric information (Diether et al, 2002 ; Nagel, 2005 ; Thomas, 2002 ).…”

Section: Data and Descriptive Statisticsmentioning

confidence: 99%

“…Marcato & Ward, 2007 ; Wei et al, 1995 ). Following recent studies in the relevant literature (Devos et al, 2019 ), we employ the bid-ask spread as our first information asymmetry measure. Following the accounting and finance literature (e.g.…”

Section: Introductionmentioning

confidence: 99%

Introducing “Focused Firms”: Implications from REIT Prime Operating Revenue

Feng

Liu

2021

J Real Estate Finan Econ

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We examine the relationship between a firm’s main business focus and its risk and performance, using the unique settings of U.S. equity real estate investment trusts (REITs). In this paper, a REIT’s prime operating revenue ratio (POR) is measured as the ratio of rental revenue to total revenue. The empirical results show that REITs that earn more revenue from their prime business—property rentals—are less apt to take on risk but also achieve higher operational performance in the cross-section and over the medium term. The magnitudes of these results in a market crisis period are even stronger than in normal times. We also find evidence that REITs with higher POR are associated with less information asymmetry, higher operational efficiency, and higher market value. We also use three alternative REIT business focus measures based on their assets, expenses, and income. The results are qualitatively and quantitatively similar. To investigate why some REITs focus to a greater extent on non-prime businesses, the paper provides evidence that REIT executives receive, on average, higher pay when their firms engage more extensively in other businesses, and larger REITs are more likely to explore non-rental-revenue businesses. Lastly, we use the coronavirus pandemic as a quasi-experimental setting and provide evidence that REITs that have earned higher POR in recent years generally achieve better operational performance and reduce risk during the first three quarters of 2020. In sum, the results suggest that a REIT’s focus on its prime business generally leads to greater profitability and lower risk.

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Information Asymmetry and REIT Capital Market Access

Cited by 20 publications

References 37 publications

ESG Disclosure, REIT Debt Financing and Firm Value

ESG Disclosure, REIT Debt Financing and Firm Value

Information Frictions in Real Estate Markets: Recent Evidence and Issues

Introducing “Focused Firms”: Implications from REIT Prime Operating Revenue

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