Faculty Scholarship 1994 - Present

Productivity Performance of De Novo REITs

In this study, we explore how long it takes the typical de novo REITs to get through the alleged initial period of low efficiency and earnings. Thus, this paper attempts to identify the age at which newly chartered financial firms attain levels of productivity growth and technical efficiency comparable to those recorded by established ones. In accordance with the relevant literature on the financial firms (e.g., Yeats et al., 1975; DeYoung and Hasan, 1998), we define de novo REITs as the REITs that have been in existence for 15 years or less. Accordingly, established REITs are the ones that are older than 15 years of age. All earlier studies have focused either on cost or profit efficiency aspects of non-REITs de novo financial firms. In this study, we analyze the trends in the productive performance of de novo REITs, as they get older. To the best of our knowledge, this investigation will be the first study that dwells on the productivity growth, technological progress and efficiency change of de novo firms as they age in both emerging and developed market settings.