STOCK MARKET AND FINANCIAL PERFORMANCE OF INTERNATIONAL LISTED REOCS AND REITS

Abstract

In this dissertation, a sample of 318 REOCs and 244 REITs in 14 countries were used, a total of 562 pooled observations for the period of 2010-2016. Descriptive statistics of stock market and financial indicators were first compiled. Next, a univariate comparative analysis was done. For the stock market indicators, the difference in means parametric t-test revealed that only Returns and Sharpe are significantly different between REOCs and REITs. For financial indicators, t-test showed that the variables Market Capitalization, Market-to-Book Value (MV/BV), ROE, ROA, Spread, Fixed Tangibility (FA/CA) and Dividend Yield, were significantly different. Next, the relationships among respective financial variables in two system equations, namely Market-to-Book ratio and Profitability equations, is assessed using multivariate regression analysis. The sample data is split into 1 overall model, 3 continent models and a REOCs only and REITs only model. The direction of influence were first hypothesized, then, findings were analyzed and compared against the actual results. The results of this research highlight specific financial variables influence successful performance of real estate firms. However, financial variables in the two system equations vary in the magnitude and direction of influence and not all results resonate with the hypothesized direction. From the results of this chapter, we are able to study how indicators differ between REOCs and REITs, examine the relationships between variables, and analyze the direction of influence, magnitude and statistical significance of indicators and how they contribute towards a firm’s success.