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On The Operating Performance of REITs Following Seasoned Equity Offerings: Anomaly Revisited

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  • Chinmoy Ghosh
  • Scott Roark

    ()

  • C. Sirmans

Abstract

We examine the operating performance of equity REITs following seasoned equity offerings from 1990–2007. This study uses a variety of measures of operating cash flow and documents improvements in industry-adjusted operating performance prior to issue and a statistically significant decline in these measures after issuance. The deterioration in operating performance of REITs is similar in magnitude to that found for industrial firms in prior studies. We find evidence of mean reversion in operating performance and timing by issuing firms, and that information asymmetry plays an important role in the results. Notably, in using a longer sample period and a variety of cash flow measures and benchmarks, this study finds evidence that is in contrast to results found in an earlier analysis of REIT operating performance. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Chinmoy Ghosh & Scott Roark & C. Sirmans, 2013. "On The Operating Performance of REITs Following Seasoned Equity Offerings: Anomaly Revisited," The Journal of Real Estate Finance and Economics, Springer, vol. 46(4), pages 633-663, May.
  • Handle: RePEc:kap:jrefec:v:46:y:2013:i:4:p:633-663
    DOI: 10.1007/s11146-011-9344-x
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    References listed on IDEAS

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    Cited by:

    1. Elizabeth Devos & Erik Devos & Seow Eng Ong & Andrew Spieler, 2017. "Are REIT Investors Overly Optimistic after Equity Offerings?: Evidence from Analyst Forecast Errors," ERES eres2017_129, European Real Estate Society (ERES).

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