Economies of Scale and Cost Efficiencies: A Panel-Data Stochastic-Frontier Analysis of Real Estate Investment Trusts

Stephen Miller, Terrence M. Clauretie and Thomas M. Springer
Additional contact information
Terrence M. Clauretie: University of Nevada, Las Vegas
Thomas M. Springer: Clemson University

No 2005-21, Working papers from University of Connecticut, Department of Economics

Abstract: This paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate a stochastic-frontier panel-data model specifying a translog cost function, covering 1995 to 2003. The results disagree with previous research in that we find little evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, the results also show that self-management of a REIT associates with more inefficiency when we measure output with assets. When we use revenue to measure output, selfmanagement associates with less inefficiency. Also contrary with previous research, higher leverage associates with more efficiency. The results further suggest that inefficiency increases over time in three of our four specifications.

Keywords: Real Estate Investment Trusts; X-efficiency; scale economies (search for similar items in EconPapers)
JEL-codes: G2 L25 L85 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2005-07
New Economics Papers: this item is included in nep-fin
Note: Presented at the Money Macro and Finance Research Group conference "Efficiency Analysis in Macroeconomics and Finance," 3 June 2005 at the University of Essex, United Kingdom.
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Citations: View citations in EconPapers (1)

Published in The Manchester School, July 2006.

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Related works:
Journal Article: ECONOMIES OF SCALE AND COST EFFICIENCIES: A PANEL‐DATA STOCHASTIC‐FRONTIER ANALYSIS OF REAL ESTATE INVESTMENT TRUSTS* (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2005-21

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