Investor Inattention to Earnings Surprises: Evidence from REIT and Tenant Information Transmission

Ryan G. Chacon and Jocelyn D. Evans

Journal of Real Estate Portfolio Management, 2023, vol. 29, issue 1, 61-77

Abstract: This paper investigates the equity Real Estate Investment Trust (REIT) shareholder response to tenant earnings announcements (EA). We find that while REIT investors respond to tenant EA, their response is focused on negative earnings surprises. Tenant EAs provide an ideal setting to test whether REIT investors overreact to imprecise signals (moderated confidence hypothesis) or underreact to material news (limited attention hypothesis). Contrary to the findings in the customer-supplier literature, we find that REIT investors pay limited attention to their large tenant’s negative earnings surprises. REIT shareholders do not fully incorporate the tenant earnings news at the time of the announcement, particularly when the tenant is more economically important to the REIT. These results shed further light on both the importance of the tenant-landlord relationship and the limited attention bias documented in the REIT literature.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10835547.2023.2179964 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:repmxx:v:29:y:2023:i:1:p:61-77

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/repm20

DOI: 10.1080/10835547.2023.2179964

Access Statistics for this article

Journal of Real Estate Portfolio Management is currently edited by Peng Liu and Vivek Sah

More articles in Journal of Real Estate Portfolio Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().