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Cost Improvements, Returns to Scale, and Cost Inefficiencies for Real Estate Investment Trusts

Stephen Miller and Thomas M. Springer
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Thomas M. Springer: Clemson University

No 2007-05, Working papers from University of Connecticut, Department of Economics

Abstract: This paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate stochastic-frontier, panel-data models specifying a translog cost function. The specified model updates the cost frontier with new information as it becomes available over time. The model can identify frontier cost improvements, returns to scale, and cost inefficiencies over time. The results disagree with most previous research in that we find no evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, higher leverage associates with more efficiency.

Keywords: Real Estate Investment Trusts; X-efficiency; scale economies (search for similar items in EconPapers)
JEL-codes: G2 L25 L85 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2007-02
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2007-05

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