Information asymmetry and REIT capital market access
Document Type
Article
Publication Date
2019
Department/School
Accounting and Finance
Publication Title
Journal of Real Estate Finance and Economics
Abstract
REITs hold relatively little cash and access capital markets often due to their favorable dividend tax status. The transparent nature of REITs, in theory, implies low information asymmetry. However, we present evidence that this phenomenon is temporal. We find that information asymmetry is relatively low when REITs access the capital markets, when compared to non-accessing periods, based on bid-ask spreads for a large number of REITs. Further, we find that REIT size and turnover affect bid-ask spreads, but the pattern of lower bid-ask spreads surrounding capital market access does manifest itself when we investigate subsamples, dependent on size and turnover. Our findings are consistent with the idea that REITs increase their disclosure when they access the capital markets, which in turn lowers information asymmetry.
Link to Published Version
Recommended Citation
Devos, E., Devos, E., Ong, S. E., & Spieler, A. C. (2019). Information asymmetry and REIT capital market access. The Journal of Real Estate Finance and Economics, 59 (1), 90–110. https://doi.org/10.1007/s11146-018-9678-8