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The Conditional Performance of REIT Stock Repurchases

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  • Erasmo Giambona
  • Joseph Golec
  • Carmelo Giaccotto

Abstract

This paper uses a conditional performance measure to test whether real estate investment trust (REIT) managers announcing stock repurchases have private information about their firms' prospects. We use stock price to condition for public information and measure the managers' implied private information by the covariance between repurchase size and subsequent stock payoffs (or operating performance). Results show that managers have private information but mostly with respect to long-term as opposed to near-term payoffs. We also find that repurchase size is positively related to a stock's idiosyncratic return volatility, perhaps because noisy stocks deviate farther from fundamental value, offering informed managers larger profit potential. Copyright Springer Science + Business Media, Inc. 2006

Suggested Citation

  • Erasmo Giambona & Joseph Golec & Carmelo Giaccotto, 2006. "The Conditional Performance of REIT Stock Repurchases," The Journal of Real Estate Finance and Economics, Springer, vol. 32(2), pages 129-149, March.
    • Handle: RePEc:kap:jrefec:v:32:y:2006:i:2:p:129-149
    DOI: 10.1007/s11146-006-6011-8
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    References listed on IDEAS

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    Cited by:

    1. Chinmoy Ghosh & Erasmo Giambona & John P. Harding & Özcan Sezer & C.F. Sirmans, 2010. "The Role of Managerial Stock Option Programs in Governance: Evidence from REIT Stock Repurchases," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 38(1), pages 31-55, March.
    2. Robert Campbell & Erasmo Giambona & C. Sirmans, 2009. "The Long-Horizon Performance of REIT Mergers," The Journal of Real Estate Finance and Economics, Springer, vol. 38(2), pages 105-114, February.

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