Corporate Transparency and Firm Growth: Evidence from Real Estate Investment Trusts (REITs)

Posted: 31 Aug 2010 Last revised: 15 Sep 2011

See all articles by Heng An

Heng An

University of North Carolina (UNC) at Greensboro - Department of Accounting and Finance

Douglas O. Cook

University of Alabama - Culverhouse College of Commerce & Business Administration

Leonard V. Zumpano

University of Alabama - Department of Economics, Finance and Legal Studies

Date Written: August 30, 2010

Abstract

Using a panel data set of Real Estate Investment Trusts (REITs), we find corporate transparency to be positively associated with REIT growth. These results suggest that greater transparency facilitates firm growth by relaxing information-based constraints on external financing. The magnitude of this effect is larger in the equity market than in the debt market. Moreover, the sensitivity of investment to cash flows is decreasing in transparency, evidence that transparency relaxes liquidity constraints. Finally, we find more transparent REITs are less likely to crash, a result that is consistent with Jin and Myers (2006).

Keywords: REITs, corporate transparency, firm growth, non-synchronicity

Suggested Citation

An, Heng and Cook, Douglas O. and Zumpano, Leonard Vincent, Corporate Transparency and Firm Growth: Evidence from Real Estate Investment Trusts (REITs) (August 30, 2010). Real Estate Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1668905

Heng An (Contact Author)

University of North Carolina (UNC) at Greensboro - Department of Accounting and Finance ( email )

Bryan School of Business and Economics
Greensboro, NC 27412
United States

Douglas O. Cook

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
205-348-8971 (Phone)
205-348-0590 (Fax)

Leonard Vincent Zumpano

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-8988 (Phone)
205-348-0590 (Fax)

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