The information content of funds from operations (FFO) for real estate investment trusts (REITs)

The information content of funds from operations (FFO) for real estate investment trusts (REITs) This paper examines the information content of alternative summary performance measures, using stock returns as the benchmark, for 138 REITs during 1994–1996. This paper tests for both incremental and relative information content of FFO (a voluntarily disclosed, accounting-based performance measure that is the industry standard for REITs) compared to GAAP net income (EPS), cash from operations, and earnings before interest, taxes, depreciation and amortization. Results indicate that both FFO and EPS consistently provide incremental information content with only weak evidence that EPS has greater relative information content and no evidence for the other summary performance measures. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting and Economics Elsevier

The information content of funds from operations (FFO) for real estate investment trusts (REITs)

Journal of Accounting and Economics, Volume 26 (1) – Jan 1, 1999

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Publisher
Elsevier
Copyright
Copyright © 1999 Elsevier Science B.V.
ISSN
0165-4101
DOI
10.1016/S0165-4101(98)00039-1
Publisher site
See Article on Publisher Site

Abstract

This paper examines the information content of alternative summary performance measures, using stock returns as the benchmark, for 138 REITs during 1994–1996. This paper tests for both incremental and relative information content of FFO (a voluntarily disclosed, accounting-based performance measure that is the industry standard for REITs) compared to GAAP net income (EPS), cash from operations, and earnings before interest, taxes, depreciation and amortization. Results indicate that both FFO and EPS consistently provide incremental information content with only weak evidence that EPS has greater relative information content and no evidence for the other summary performance measures.

Journal

Journal of Accounting and EconomicsElsevier

Published: Jan 1, 1999

References

  • Value-relevance of nonfinancial information
    Amir, E.; Lev, B.
  • The conservatism principle and the asymmetric timeliness of earnings
    Basu, S.
  • Financial Reporting
    Beaver, W.
  • Relative versus incremental information content
    Biddle, G.; Seow, G.; Siegel, A.
  • Stakeholders' implicit claims and accounting method choice
    Bowen, R.; DuCharme, L.; Shores, D.
  • Measuring security price performance
    Brown, S.; Warner, J.
  • The information content of losses
    Hayn, C.
  • Valuation uncertainty, institutional involvement, and the underpricing of IPO's
    Ling, D.; Ryngaert, M.
  • Estimating earnings response coefficients
    Teets, W.; Wasley, C.

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