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Volume 35, Number 3, 2013

The Information Content of REIT Credit Rating Actions and Transparency
 

Alan Tidwell
Department of Accounting and Finance
Turner College of Business
Columbus State University
4225 University Avenue
Columbus Georgia 31907
Email: atidwell@columbusstate.edu

Alan Ziobrowski
Department of Real Estate
J. Mack Robinson College of Business
Georgia State University
35 Broad Street, Suite 1405
Atlanta, GA 30303
Email: aziobrowski@gsu.edu

Paul Gallimore
School of Real Estate & Planning
Henley Business School
University of Reading, Whiteknights
Reading, RG6 6UD, UK
Email: p.gallimore@reading.ac.uk

SeungHan Ro
Department of Real Estate
Konkuk University
1 Hwayang-dong, Gwangjin-gu
Seoul, Korea 143-701
Email: shro@konkuk.ac.kr

 

Abstract:

We examine the short-run and long-run price reaction of equity REIT shares following credit rating actions, testing the transparency of the REIT structure. Generally, the economic effect on the stock price is subdued for both upgrades and downgrades compared to prior literature examining the broader U.S. equity market. An examination of trading volume revealed a significant increase in trading in reaction to downgrade credit rating changes, with a more subdued response to upgrades. The findings support the notion that REITs are more publicly forthcoming about the expectation of positive news in comparison to negative news.

 
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