Abstract
Since REITs are subject to mandatory Dividend payouts, and the REIT qualificataion statutes (Assset tests and Income tests), REITs have substantial incentives to manipulate their reported earnings, cash flow and assets. Also the unique nature of REITs creates accounting distortions that cause information asymmetry. This article identifies and analyses these issues and develops relevant theories about why REITs are inefficient and should be eliminated or modified substantially. The theories introduced in this article also apply to publicly traded companies that own substantial commercial real estate such as retailing chains, restaurant chains, hotel companies, and large healthcare companies - the prospects and profitability of these entities are sensitive to the quality and use-value of their real estate holdings.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
