REIT Share Repurchase Decisions and Stock Market Liquidity

Gow-Cheng Huang, Kartono Liano and Ming-Shiun Pan

Journal of Real Estate Portfolio Management, 2012, vol. 18, issue 1, 43-56

Abstract: This study examines whether stock market liquidity affects a real estate investment trust's (REIT's) decision to initiate a share repurchase program. The results show that repurchasing REITs exhibit a higher liquidity than their peers that do not initiate a repurchase program. After controlling for other possible motivations for share repurchases, there is little evidence that liquidity affects repurchase initiations by REITs. REITs tend to initiate a share repurchase program when operating cash flows are sufficient, financial leverage is low, and market value is large. Also, liquidity does not influence a REIT's decision to substitute repurchases for extra dividends. Overall, the findings suggest that liquidity does not affect a REIT's decision to repurchase its shares.

Date: 2012
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DOI: 10.1080/10835547.2012.12089919

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