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REITs as Captive-Financing Affiliates: Impact on Financial Performance

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Abstract

Some real estate investment trusts are created as "captive-financing" affiliates by their sponsors. This creates conflicts of interest between the sponsor/manager and shareholders. Such conflicts could affect the financial performance of the firm. Using data on a sample of REITs, results show that captive-financing REITs' financial performance is on average inferior to that of non-captive REITs.

Suggested Citation

  • Cheng-Ho Hsieh & C.F. Sirmans, 1991. "REITs as Captive-Financing Affiliates: Impact on Financial Performance," Journal of Real Estate Research, American Real Estate Society, vol. 6(2), pages 179-190.
  • Handle: RePEc:jre:issued:v:6:n:2:1991:p:179-190
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    File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol06n02/v06p179.pdf
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    References listed on IDEAS

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    1. Benston, George J & Smith, Clifford W, Jr, 1976. "A Transactions Cost Approach to the Theory of Financial Intermediation," Journal of Finance, American Finance Association, vol. 31(2), pages 215-231, May.
    2. W. B. Brueggeman & A. H. Chen & T. G. Thihodeau, 1984. "Real Estate Investment Funds: Performance and Portfolio Considerations," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 12(3), pages 333-354.
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    Cited by:

    1. Jay C. Hartzell & Jarl G. Kallberg & Crocker H. Liu, 2008. "The Role of Corporate Governance in Initial Public Offerings: Evidence from Real Estate Investment Trusts," Journal of Law and Economics, University of Chicago Press, vol. 51(3), pages 539-562, August.
    2. Han, Bing, 2004. "Insider Ownership and Corporate Value: Evidences from Real Estate Investment Trust," Working Paper Series 2004-1, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    3. repec:kap:jrefec:v:55:y:2017:i:3:d:10.1007_s11146-016-9577-9 is not listed on IDEAS
    4. Patrick Lecomte & Joseph Ooi, 2013. "Corporate Governance and Performance of Externally Managed Singapore Reits," The Journal of Real Estate Finance and Economics, Springer, vol. 46(4), pages 664-684, May.
    5. Su Chan & Jiajin Chen & Ko Wang, 2013. "Are REIT IPOs Unique? The Global Evidence," The Journal of Real Estate Finance and Economics, Springer, vol. 47(4), pages 719-759, November.
    6. H. Swint Friday & G. Stacy Sirmans, 1998. "Board of Director Monitoring and Firm Value in REITs," Journal of Real Estate Research, American Real Estate Society, vol. 16(3), pages 411-427.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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