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The Determinants of Organizational Form Changes: Evidence and Implications from Real Estate
Articles and Chapters
  • Aswath Damodaran, New York University
  • Kose John, New York University
  • Crocker H. Liu, Cornell University
Publication Date
1-1-1997
Disciplines
Abstract

We study changes in the real estate industry among organizational forms with varying degrees of restrictiveness and document the associated changes in profitability, free cash flow, debt, dividends, and investment policies. All troubled firms in our sample move to a more flexible organizational structure, with subsequent reductions in dividends, improvements in performance, and increases in asset sales and investments. Healthy firms that move to a tighter structure have larger free cash flows before the change; they increase dividends, reduce free cash flows and improve profitability after the change. We document evidence of tax considerations in organizational changes.

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Required Publisher Statement
© Elsevier. Final version published as: Damodaran, A., John, K., & Liu, C. H. (1997). The determinants of organizational form changes: Evidence and implications from real estate. Journal of Financial Economics, 45(2), 169-192. Reprinted with permission. All rights reserved.

Citation Information

Damodaran, A., John, K., & Liu, C. H. (1997). The determinants of organizational form changes: Evidence and implications from real estate[Electronic version]. Retrieved [insert date], from Cornell University, School of Hospitality Administration site: http://scholarship.sha.cornell.edu/articles/247