Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/220224
Title: THE DIVERSIFICATION STRUCTURE OF S-REITS AND ITS IMPACT ON PERFORMANCE AND MARKET VALUATION
Authors: DOONG XIN WEI ELSIE
Keywords: Real Estate
Ooi Thian Leong Joseph
2011/2012 RE
Diversification
Singapore
S-REITs
Issue Date: 17-May-2012
Citation: DOONG XIN WEI ELSIE (2012-05-17). THE DIVERSIFICATION STRUCTURE OF S-REITS AND ITS IMPACT ON PERFORMANCE AND MARKET VALUATION. ScholarBank@NUS Repository.
Abstract: The diversification dilemma has been greatly debated upon in corporate finance literature. Researchers have claimed that diversification provides portfolio benefits in terms of enhanced performance and reduced risks. In contrast, other researchers have argued that diversification does not create value, as it is linked to increased expenses. This dissertation examines whether the diversification structure of Singapore real estate investment trusts (S-REITs) impacts its performance and market valuation. The measures used include the market-adjusted return, beta, Jensen’s Alpha, Sharpe Ratio, Treynor Index, and Tobin’s q ratio. The main objective of this study is to investigate whether diversified S-REITs, in terms of property type and geography, perform better than focused S-REITs. The overall results provide evidence that both property type diversified and geographically diversified S-REITs do not have lower systematic risk than focused S-REITs. This does not support Markowitz’s modern portfolio theory that diversification would minimize risk. However, in terms of risk-adjusted returns, geographically diversified S-REITs outperform geographically focused S-REITs. This is not true for property type diversified S-REITs. Hence, it seems that when REIT managers choose a diversification strategy, a geographical diversification strategy would be a better choice than a property type diversification strategy. Geographically diversified S-REITs seem to be rewarded for its higher risk with higher return. Lastly, firm valuation does not seem to have a statistically significant relationship with diversification.
URI: https://scholarbank.nus.edu.sg/handle/10635/220224
Appears in Collections:Bachelor's Theses

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