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Manipulation in U.S. REIT Investment Performance Evaluation: Empirical Evidence
Articles and Chapters
  • Jamie Alcock, University of Cambridge
  • John Glascock, University of Connecticut
  • Eva Steiner, Cornell University School of Hotel Administration
Publication Date
10-1-2013
Disciplines
Abstract

We investigate whether Real Estate Investment Trust (REIT) managers actively manipulate performance measures in spite of the strict regulation under the REIT regime. We provide empirical evidence that is consistent with this hypothesis. Specifically, manipulation strategies may rely on the opportunistic use of leverage. However, manipulation does not appear to be uniform across REIT sectors and seems to become more common as the level of competition in the underlying property sector increases. We employ a set of commonly used traditional performance measures and a recently developed manipulation-proof measure (MPPM, Goetzmann, Ingersoll, Spiegel, and Welch (2007)) to evaluate the performance of 147 REITs from seven different property sectors over the period 1991-2009. Our findings suggest that the existing REIT regulation may fail to mitigate a substantial agency conflict and that investors can benefit from evaluating return information carefully in order to avoid potentially manipulative funds.

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Required Publisher Statement
© Springer. Final version published as: Alcock, J., Glascock, J., & Steiner, E. (2013). Manipulation in U.S. REIT investment performance evaluation: Empirical evidence. Journal of Real Estate Finance and Economics, 47(3), 434-465. Reprinted with permission. All rights reserved.

Citation Information

Alcock, J., Glascock, J., & Steiner, E. (2013). Manipulation in U.S. REIT investment performance evaluation: Empirical evidence [Electronic version]. Retrieved [insert date], from Cornell University, School of Hotel Administration site: http://scholarship.sha.cornell.edu/articles/906