Skip to main content
main-content
Top

Hint

Swipe to navigate through the articles of this issue

07-07-2018 | Issue 3/2020

The Journal of Real Estate Finance and Economics 3/2020

Investors’ Limited Attention: Evidence from REITs

Journal:
The Journal of Real Estate Finance and Economics > Issue 3/2020
Authors:
Honghui Chen, David M. Harrison, Mahsa Khoshnoud

Abstract

This paper examines the degree to which the market prices of publicly traded firms reflect and respond to new information regarding the economic viability and vitality of organizations to which they are strategically linked. More specifically, we exploit the uniquely transparent nature of the lessor-lessee relationship across commercial real estate markets to evaluate whether future returns to real estate investment trusts (REITs) are systematically affected by the financial return performance and/or operational opacity of the tenants who lease their investment properties. Using a hand collected data set identifying the principal tenants of 96 publicly traded REITs, we find those firms with the best performing tenants generate annualized abnormal returns which are approximately six percentage points higher than those realized by REITs with the worst performing tenants. These results are robust to a variety of model specifications, and a closer inspection of the results reveals these performance differentials are consistent with emerging evidence across the literature suggesting investors’ limited attention materially influences the return predictability of assets. We thus conclude investors’ limited attention leads to the failure of REIT prices to fully reflect the valuation implications of their tenants’ return performance.

Please log in to get access to this content

To get access to this content you need the following product:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 69.000 Bücher
  • über 500 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Umwelt
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Testen Sie jetzt 30 Tage kostenlos.

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 58.000 Bücher
  • über 300 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Testen Sie jetzt 30 Tage kostenlos.

Literature
About this article

Other articles of this Issue 3/2020

The Journal of Real Estate Finance and Economics 3/2020 Go to the issue

Premium Partner

    Image Credits