Stock market information and REIT earnings management

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10 Scopus citations

Abstract

This paper investigates the interaction between stock price movement and REIT earnings management. We examine whether information generated from stock price volatility influences managers' incentives to engage in earnings management. Consistent with the efficient markets hypothesis, we find that suspected earnings-management firms do not appear to be more mispriced than others. In addition, using idiosyncratic volatility as a measure of private information embedded in stock price, we find that negative real earnings management, which allows REITs to circumvent the mandatory dividend payout requirement, is associated with greater information embedded in REIT stock prices. The result implies that information contained in stock price volatility motivates REIT managers to more actively avoid regulatory costs.

Original languageEnglish (US)
Pages (from-to)102-137
Number of pages36
JournalJournal of Real Estate Research
Volume32
Issue number1
StatePublished - May 11 2010

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance (miscellaneous)

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