The information content of funds from operations and net income in real estate investment trusts

Sang Ik Seok, Hoon Cho and Doojin Ryu

The North American Journal of Economics and Finance, 2020, vol. 51, issue C

Abstract: This study compares the information content of funds from operations (FFO) and net income (NI) in the real estate investment trust (REIT) industry. We find that models using FFO explain more of the variance in cumulative abnormal returns around earnings announcement dates than models using NI do. We also find that the information content of FFO differs across REITs of different sizes. FFO does not provide useful information to investors in the case of large REITs. Finally, we show that the gain or loss from sales of property is relevant to valuing large REITs.

Keywords: Earnings announcement; Funds from operations; Market reaction; Net income; Real estate investment trust (search for similar items in EconPapers)
JEL-codes: G14 G29 L85 M41 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:51:y:2020:i:c:s1062940819300907

DOI: 10.1016/j.najef.2019.101063

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