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Paper eres2005_150:
Cash Flow Volatility and Dividend Policy for U.S. REITs

id eres2005_150
authors Dai, Jing and Seow Eng Ong
year 2005
title Cash Flow Volatility and Dividend Policy for U.S. REITs
source Book of Abstracts: 2005 European Real Estate Society conference in association with the International Real Estate Society
summary The dividend debate between agency cost theory and information signaling theory provides contrasting explanations of the relationship between dividend payout and cash flow volatility. This paper attempts to test these two theories empirically using data from 135 public US equity REITs from 1985 to 2003. We explore the role of expected cash flow volatility as a determinant of dividend policy for REITs, by employing panel regressions on excess dividend. The paper finds strong evidence suggesting that REITs pay out substantial excess dividend to avoid agency cost when the cash flow is more volatile. The information signaling theory plays a relatively minor role in REIT firms' dividend policy concerning the cash flow volatility. Time Series Relationships between Bonds, Real Estate and Share Returns for the
series ERES:conference
type normal paper
discussion No discussions. Post discussion ...
ratings
session Session F4
last changed 2008/11/01 09:47
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