Home  About us  Contact
 

Investment Trusts (investment + trust)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Kinds of Investment Trusts

  • estate investment trust
    		•
  • real estate investment trust
    		•

    Selected Abstracts

    Financing Choice and Liability Structure of Real Estate Investment Trusts

    REAL ESTATE ECONOMICS, Issue 3 2003
    David T. Brown
    We conduct an analysis of public financial offerings of equity Real Estate Investment Trusts (REITs), with a focus on liability structure effects and whether or not firms target longer-run debt ratios. Our major findings are that (1) proceeds from equity offers are more likely to fund investment, whereas public debt offer proceeds are typically used to reconfigure the liability structure of the firm; (2) public debt issuers are often capital constrained and target total leverage ratios to retain an investment grade credit rating; and (3) the preoffer liability structure affects the issuance choice decision, in that firms with higher preoffer levels of secured (unsecured) debt tend to issue equity (public debt). Other notable findings are that the market for public REIT debt is integrated with the broader debt markets and that higher credit quality firms issue longer-maturing bonds. [source]

    The Information Content of Method of Payment in Mergers: Evidence from Real Estate Investment Trusts (REITs)

    REAL ESTATE ECONOMICS, Issue 3 2001
    Robert D. Campbell
    We provide evidence on the information content of the method of payment in mergers by examining shareholder returns in a sample of REIT mergers over the period 1994,1998. When the target firm is publicly held, we find that transactions are always stock-financed, and that acquiring firm shareholders sustain small negative returns around the announcement date. When the target is privately held, cash financing, mixed (stock and cash) financing, and placement of blocks of acquirer stock with target owners are more prevalent. Acquirer returns are positive in stock-financed mergers when the target is private, which is consistent with both the information signaling and monitoring by blockholders hypotheses. Further analysis supports the information signaling hypothesis as the dominant explanation. The effects of other explanatory variables are similar whether the target is public or private. Most significantly, acquiring shareholder returns are negatively related to the acquirer's size, but positively related to the acquirer's use of the UPREIT organizational structure. The positive wealth effects of the UPREIT structure are not fully explained as the capitalization of tax benefits. [source]

    The Role of Managerial Stock Option Programs in Governance: Evidence from REIT Stock Repurchases

    REAL ESTATE ECONOMICS, Issue 1 2010
    Chinmoy Ghosh
    This article examines the role of stock option programs and executive holdings of stock options in real estate investment trust (REIT) governance. We study the issue by analyzing how the market reaction to a stock repurchase announcement varies as a function of the individual REIT's governance structure. In particular, we examine how executive and employee stock option holdings influence the market reaction to a firm's announcement of a stock repurchase. Using a sample of REIT repurchase announcements, we find that the market reacts more favorably to announcements by firms where executives have larger option holdings and the chief executive officer is not entrenched. Our results with respect to the roles of stock option holdings of executives and nonexecutives differ from those reported for a cross-section of non-REIT firms. While we find evidence supporting the importance of executive stock options in aligning the incentives of management and reinforcing the positive signaling associated with a repurchase announcement, we find little evidence that the market views REIT repurchases as being used primarily to fund option exercise. We attribute these findings to greater dependence by REIT investors on internal governance mechanisms (such as stock option programs) as a result of regulatory restrictions that limit external monitoring such as hostile takeovers. [source]

    How Did the 2003 Dividend Tax Cut Affect Stock Prices?

    FINANCIAL MANAGEMENT, Issue 4 2008
    Gene Amromin
    We test the hypothesis that the 2003 dividend tax cut boosted US stock prices and thereby lowered the cost of equity capital. Using an event-study methodology, we attempt to identify an aggregate stock market effect by comparing the behavior of US common stock prices with that of foreign equities and the equities of real estate investment trusts (REITs). We also examine the relative cross-sectional response of prices of high- and low-dividend-paying stocks. We do not find any imprint of the dividend tax cut news on the value of the aggregate US stock market. On the other hand, high-dividend stocks outperformed low-dividend stocks by a few percentage points over the event windows, suggesting that the tax cut may have induced asset reallocation within equity portfolios. Finally, the positive abnormal return on nondividend paying US stocks in 2003 does not appear to be tied to tax cut news. [source]

    Is prior performance priced through closed-end fund discounts?

    INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 2 2010
    Michael Bleaney
    Abstract In open-end mutual funds (unit trusts), there is a strong positive cross-sectional relationship between net inflows to individual funds and past performance, as if investors attributed performance to managerial skill. Performance shows only very weak persistence, however, so at first sight investors do not appear to gain anything by responding to past performance information. This behaviour can be explained by the fact that past performance is effectively unpriced in the unit trust market, since management fees are unresponsive to demand. If investors believe that there is a non-zero probability that future performance will turn out to be positively correlated with past performance (i.e. that there is an element of managerial skill in performance), but a zero probability that this correlation will be negative, it is rational to prefer funds with better past performance when performance is not priced. In other words, it costs nothing to insure against the possibility of some managerial skill effect. If this explanation of the flow,performance relationship in unit trusts is correct, one would expect the relationship between investor demand and past fund performance to be much weaker if past performance were to be priced. We test this hypothesis in the market for closed-end funds (investment trusts). Because closed-end funds do not trade at net asset value, but at a price determined in the market, strong demand will raise the ratio of price to net asset value (known as the premium). Since it is well established that premiums are mean-reverting, future shareholder returns on funds currently on high premiums tend to be depressed by the reversion of the premium to the mean. In the closed-end fund market, as for open-end funds, there is little evidence of performance persistence, and therefore, to the extent that funds with good past performance are pushed to higher premiums, the expected return on them is less than on the average fund. This implicit pricing mechanism should mean that demand is a declining function of the premium, so that, even if demand is an increasing function of past performance for a given premium, any effect on the premium itself will be muted. We test this hypothesis for closed-end funds traded in the US and the UK. We find that there is a statistically significant effect of past performance on the premium in both countries. However, consistent with the hypothesis, it has limited economic significance, since it represents only a small component of premium variability. Copyright © 2008 John Wiley & Sons, Ltd. [source]

    Corporate Governance and Performance: The REIT Effect

    REAL ESTATE ECONOMICS, Issue 1 2010
    Rob Bauer
    Real estate investment trusts (REITs) offer a natural experiment in corporate governance due to the fact that they leave little free cash flow for management, which reduces agency problems. We exploit a unique and leading corporate governance database to test whether corporate governance matters for the performance of U.S. REITs. We document for a sample including governance ratings of more than 220 REITs that firm value is significantly related to firm-level governance for REITs with low payout ratios only. Repeating the analysis with the complete database that includes more than 5,000 companies and a control sample of firms with high corporate real estate ratios, we find a strong and significantly positive relation between our governance index and several performance variables, indicating that the partial lack of a relation between governance and performance in the real estate sector might be explained by a REIT effect. [source]

    Comovement After Joining an Index: Spillovers of Nonfundamental Effects

    REAL ESTATE ECONOMICS, Issue 1 2007
    Brent W. Ambrose
    This study considers the case of two overlapping categories in the context of recent category models. Specifically, we examine whether investor sentiment and market frictions specific to one category can affect the returns on assets belonging to the other category. With recent additions of several real estate investment trusts (REITs) into general stock market indices as a natural experiment, we find support for spillovers of such nonfundamental effects, as evidenced by the increased return correlation between REITs that remain outside the index and the index stocks. Further analysis reveals that market frictions play a greater role than investor sentiment. [source]

    The Ex,Dividend Pricing of REITs

    REAL ESTATE ECONOMICS, Issue 4 2002
    William G. Hardin III
    Past studies have shown that ex,dividend stock prices are not fully reflective of dividend payments. A tax,induced clientele effect and micromarket limitations in stock pricing have been used to explain this pricing anomaly. This study focuses on the ex,dividend behavior of real estate investment trusts (REITs). Due to a low correlation between dividend size and dividend yield, REITs permit a cleaner examination of a tax,induced clientele effect. The results indicate that tick constraints in pricing ex,dividend stocks create the appearance of a tax,induced clientele effect in REITs when none should exist. [source]

    Institutional Investors' Preferences for REIT Stocks

    REAL ESTATE ECONOMICS, Issue 4 2002
    Brian A. Ciochetti
    This article investigates the determinants of real estate investment trusts (REIT) portfolio investment and institutional REIT ownership using multivariate Tobit regressions. We contend that many institutional investors take larger positions in more liquid assets like REIT stocks, as compared with private real estate equities, because of liquidity considerations. Consistent with this contention, we find that liquidity constraints are significantly related to REIT portfolio investment by institutional investors. We also find that institutional investors have different preferences for REIT stocks than do other investors; they generally prefer larger, more liquid REIT stocks. [source]