Please use this identifier to cite or link to this item: http://scholarbank.nus.edu.sg/handle/10635/36117
Title: UNDERSTANDING THE DETERMINANTS OF FIRM GROWTH IN YOUNG REITS
Authors: RADHESHYAM CHAMARAJANAGARA GOPINATH
Keywords: Firm Growth Determinants, REITs, Firm Growth and Profitability
Issue Date: 1-Aug-2012
Source: RADHESHYAM CHAMARAJANAGARA GOPINATH (2012-08-01). UNDERSTANDING THE DETERMINANTS OF FIRM GROWTH IN YOUNG REITS. ScholarBank@NUS Repository.
Abstract: The main objective of this study is to investigate the determinants of firm growth in young REITs with the view that REITs with its unique operating conditions may have different implications for new venture growth. This study aims to (a) document growth characteristics of REITs, (b) empirically examine different growth determinants of REITs, (c) explore different growth strategies adopted by REITs, and (d) investigate the dual relationship between growth and profitability in REITs. A detailed examination of the evolution over a decade of 90 REITs founded in 1993 and 1994 reveals that young REITs typically follow a continuous growth path in its nascent years. We find positive persistency in growth rates in young REITs, but sustained growth among REITs beyond five years is rare. On the probability of survival, we find that REITs¿ failure rate declines with size and age. Also, new REITs that experience high growth in its early years are more likely to survive longer. We use GMM-system estimator to test a dynamic panel data model of firm growth. Using data on 148 US equity REITs that had its IPO during the period 1993-2005, we find that REITs¿ growth is inversely proportional to its size and leverage and directly related to cash flow, Tobin¿s Q and institutional ownership. Age shows a non-linear relationship with growth whereas insider ownership does not influence growth in REITs. Strategy wise acquisitions have been the preferred route for external growth compared to property development which is considered to be risky. Finally, we find a small positive influence of profit rates on subsequent growth and a positive and significant influence of growth on profits. We reject the proposition of ¿Penrose effect¿ as we find that asset growth in REITs lead to a higher profit rate.
URI: http://scholarbank.nus.edu.sg/handle/10635/36117
Appears in Collections:Master's Theses (Open)

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