Information Asymmetry and Corporate Liquidity Management: Evidence from Real Estate Investment Trusts

Heng An (), William Hardin and Zhonghua Wu

The Journal of Real Estate Finance and Economics, 2012, vol. 45, issue 3, 678-704

Abstract: We examine the impact of information asymmetry on a firm’s choice between cash and credit lines for corporate liquidity management using a panel data set from real estate investment trusts (REITs). Information asymmetry, as measured by analyst forecast error and dispersion, is negatively related to the use of lines of credit. Specifically, firms with more severe information asymmetry are less likely to have access to bank credit lines. Concurrently, more transparent firms are more likely to utilize bank credit lines as opposed to cash for liquidity management. The results are robust to alternative information asymmetry proxies and specifications. These findings suggest that information asymmetry plays an important role in corporate liquidity management. Copyright Springer Science+Business Media, LLC 2012

Keywords: Information asymmetry; Liquidity management; REITs; G21; G32 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s11146-010-9284-x

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