Dividend Behaviour of U.S. Equity REITs

Journal of Property Research, June 2009, pp 105-123

39 Pages Posted: 6 Mar 2010 Last revised: 17 Jan 2013

See all articles by Darren K. Hayunga

Darren K. Hayunga

University of Georgia - Department of Insurance, Legal Studies, Real Estate

Clifford P. Stephens

Louisiana State University, Baton Rouge - E.J. Ourso College of Business Administration

Date Written: November 23, 2009

Abstract

A new era began for U.S. equity real estate investment trusts (REITs) around 1992. This study is the first to document the dividend smoothing, determinants of dividend payouts, and the market reaction to dividend announcements of the modern REIT. We find the Lintner (1956) smoothing parameter suggests a high level of dividend smoothing in quarterly data and, although we observe substantially less smoothing in the annual data, modern REITs smooth dividends at least as much as their industrial counterparts. Beyond the dividend paid last period and contemporaneous earnings, usual determinants of dividend behaviour in non-REIT firms are not economically significant, which is a departure from old-era REITs. Additionally, as compared to non-REIT firms, we find muted excess stock returns upon announcements of dividend changes. Overall, our findings suggest that managers set a stable (smooth) dividend policy even in the relative absence of market imperfections.

Keywords: REITs, Dividend Behaviour, Dividend Smoothing

JEL Classification: G11, G35

Suggested Citation

Hayunga, Darren K. and Stephens, Clifford P., Dividend Behaviour of U.S. Equity REITs (November 23, 2009). Journal of Property Research, June 2009, pp 105-123, Available at SSRN: https://ssrn.com/abstract=1565620 or http://dx.doi.org/10.2139/ssrn.1565620

Darren K. Hayunga (Contact Author)

University of Georgia - Department of Insurance, Legal Studies, Real Estate ( email )

Athens, GA 30602-6254
United States
706-542-1365 (Phone)

Clifford P. Stephens

Louisiana State University, Baton Rouge - E.J. Ourso College of Business Administration ( email )

Department of Finance
2159 CEBA
Baton Rouge, LA 70803-6308
United States
225-578-6334 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
157
Abstract Views
1,118
rank
232,892
PlumX Metrics