Asset Growth and Stock Performance: Evidence from Reits

44 Pages Posted: 4 Jun 2020

See all articles by David C. Ling

David C. Ling

University of Florida - Warrington College of Business Administration

Joseph T. L. Ooi

National University of Singapore (NUS) - Department of Real Estate

Ruoran Xu

Independent

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Date Written: Autumn 2019

Abstract

In this article, we examine the impact of asset growth rates on the future stock performance of 308 publicly traded real estate investment trusts (REITs). We observe that fast‐growing REITs tend to underperform slow growing REITs. However, we find evidence that the growth effect is significantly less negative for REITs selling at a premium to net asset value. In addition, we observe the asset growth effect only in the subsample of REITs that engages in equity issuance over the next 12 months. The combined evidence suggests contemporaneous equity dilution, which has not been considered in previous studies, may provide an explanation for the underperformance of fast‐growing firms.

Suggested Citation

Ling, David Curtis and Ooi, Joseph T. L. and Xu, Ruoran, Asset Growth and Stock Performance: Evidence from Reits (Autumn 2019). Real Estate Economics, Vol. 47, Issue 3, pp. 884-927, 2019, Available at SSRN: https://ssrn.com/abstract=3617153 or http://dx.doi.org/10.1111/1540-6229.12186

David Curtis Ling (Contact Author)

University of Florida - Warrington College of Business Administration ( email )

P.O. Box 117168
Gainesville, FL 32611
United States
352-392-9307 (Phone)
352-392-0301 (Fax)

Joseph T. L. Ooi

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Ruoran Xu

Independent ( email )

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