Ownership Structure and the Value of the Firm: The Case of REITs

Swint Friday, Stacy Sirmans and Mitchell Conover

Journal of Real Estate Research, 1999, vol. 17, issue 1, 71-90

Abstract: This article examines the relation between ownership structure and firm value as proxied by market-to-book ratios for real estate investment trusts (REITs) over the period 1980 to 1994. Piecewise regression analysis reveals a nonlinear relationship between REIT market-to-book ratios and ownership structure. Low levels of inside ownership are associated with increased market-to-book ratios for equity REITs. However, as inside block ownership rises above 5%, equity REIT market-to-book ratios decline. The opposite result is true for hybrid and mortgage REITs. Similarly, higher levels of outside blockholdings have a negative impact on both equity and hybrid and mortgage market-to-book ratios.

Date: 1999
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DOI: 10.1080/10835547.1999.12090967

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