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A-Reits Value Relevance of Performance Measures: Net Income, Funds from Operations and Fair Value of Investment Property

Author

Listed:
  • Sarpong-Oti William

    (School of Business, Western Sydney University, Parramatta NSW 2150, Australia)

  • Gholipour Hassan F.

    (School of Business, Western Sydney University, Parramatta NSW 2150, Australia)

  • Marzuki Jufri

    (School of Business, Western Sydney University, Parramatta NSW 2150, Australia)

  • Chege Fredrick

    (School of Business, Western Sydney University, Parramatta NSW 2150, Australia)

Abstract

This study investigates value relevance of three-performance measures (net income (NI), funds from operations (FFO), and fair values on investment property (FVIP) on stock prices of Australian Real Estate Investment Trusts (A-REITs). Using data from A-REITs over the period 2012–2021 and estimating a panel system Generalized Method of Moments (GMM), results suggest that of the three, only net income is significantly and positively related to the stock prices of A-REITs. The implication of this study for investors and fund managers is that net income is the most important accounting number that investors look for in the financial statements of A-REITs.

Suggested Citation

  • Sarpong-Oti William & Gholipour Hassan F. & Marzuki Jufri & Chege Fredrick, 2025. "A-Reits Value Relevance of Performance Measures: Net Income, Funds from Operations and Fair Value of Investment Property," Real Estate Management and Valuation, Sciendo, vol. 33(3), pages 1-10.
    • Handle: RePEc:vrs:remava:v:33:y:2025:i:3:p:1-10:n:1001
    DOI: 10.2478/remav-2025-0021
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    References listed on IDEAS

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    1. Holthausen, Robert W. & Watts, Ross L., 2001. "The relevance of the value-relevance literature for financial accounting standard setting," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 3-75, September.
    2. Seok, Sang Ik & Cho, Hoon & Ryu, Doojin, 2020. "The information content of funds from operations and net income in real estate investment trusts," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    3. Skinner, Douglas J., 1999. "How well does net income measure firm performance? A discussion of two studies1," Journal of Accounting and Economics, Elsevier, vol. 26(1-3), pages 105-111, January.
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    Keywords

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    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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