Information asymmetry and REITs' excess dividends: US and European market comparison. Issue 6 (30th December 2020)

• Record Type: Journal Article
• Authors: Morri, Giacomo; Palmieri, Federico; Sironi, Emiliano
• Is Part Of: Journal of property investment & finance. Volume 39:Issue 6(2021)
• Page Start: 545
• Page End: 560
• Publication Date: 2020-12-30
• Subjects: Information asymmetrisy -- REITs -- Dividend policy -- Tobin's Q -- Financial markets -- Real estate; G34 -- R30; Real estate investment -- Great Britain -- Periodicals; Real property -- Valuation -- Great Britain -- Periodicals; Real estate development -- Great Britain -- Finance -- Periodicals; 332.6324094105
• DOI: 10.1108/JPIF-07-2020-0080
• Languages: English
• ISSNs: 1463-578X

Abstract

Abstract : Purpose: The purpose of this study is to analyze the determinants that lead REITs to pay out more dividends than the required level to retain their tax-favored status. In particular, the focus is on the effect that information asymmetry has on REITs' excess dividends distribution. Design/methodology/approach: A sample of 341 REITs from the USA, France, the UK, Spain, Belgium, Germany, the Netherlands and Italy has been analyzed for the period 2000–2016. Employing multiple linear regression models, the effects of information asymmetry, cash flow, size, ROA, leverage and treasury shares on excess dividends have been explored. Findings: Results indicate that REITs with greater information asymmetry distribute significantly more excess dividends, with superior evidence in Europe than in the USA. Regarding other determinants, cash flow influences excess dividends the most, whereas ROA and common shares repurchase have an inverse relationship with excess dividends. Practical implications: The paper explores the effects of excess dividends distribution on the most relevant REITs features. The joint analysis of the European and the US samples allows this study to make a comparison between the two markets and to identify affinities and differences. Originality/value: The paper tests whether a proxy of asymmetry information plays a role in affecting the excess dividends distribution. In contrast to previous researches, it expands the analysis by comparing the US and European markets to underline any difference in the effect of asymmetry information on excess dividends. The topic has never been investigated before in relation to the European market.