Economies Of Scale And Cost Efficiencies: A Panel-Data Stochastic-Frontier Analysis Of Real Estate Investment Trusts
AbstractThis paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate a stochastic-frontier, panel-data model specifying a translog cost function, covering 1995-2003. The results disagree with previous research in that we find little evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, the results also show that self-management of a REIT associates with more inefficiency when we measure output with assets. When we use revenue to measure output, self-management associates with more efficiency. Also contrary to previous research, higher leverage associates with more efficiency. The results further suggest that inefficiency increases over time in three of our four specifications. Copyright Blackwell Publishing Ltd and The University of Manchester 2006.
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Bibliographic InfoArticle provided by University of Manchester in its journal Manchester School.
Volume (Year): 74 (2006)
Issue (Month): 4 (07)
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- Stephen M. Miller & Terrence M. Clauretie & Thomas M. Springer, 2005. "Economies of Scale and Cost Efficiencies: A Panel-Data Stochastic-Frontier Analysis of Real Estate Investment Trusts," Working papers 2005-21, University of Connecticut, Department of Economics.
- G2 - Financial Economics - - Financial Institutions and Services
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
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