ESSAYS ON STRATEGIC GROWTH OF REITS AND REOCS

Abstract

The first essay examines the impact of asset growth on the stock performance of REITs. The results show that slow growing REITs tend to outperform fast growing REITs in the long run. But the effect is weaker than what is found in the general finance literature. The second essay examines the role of corporate watchdogs in preventing REITs managers from pursuing value-destroying growth. The effectiveness of three corporate watchdogs were examined, including institutional investors, independent directors, and external creditors. Evidence suggests that institutional investors are the most effective watchdog in disciplining the managers from undertaking bad investments. The third essay examines the stock market?s response to property subsidiary sell-offs in China. Non-SOE sell-off announcements are associated with statistically positive market returns, while, SOE sell-off announcements are associated with statistically negative market returns. This divergent market reaction is consistent with the high agency costs associated with state ownership.