Corporate Transparency and Firm Growth: Evidence from Real Estate Investment Trusts |
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| Authors: | Heng An Douglas O Cook Leonard V Zumpano |
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| Institution: | 1. Department of Finance, Beacom School of Business, University of South Dakota, Vermillion, SD 57069 or hunter.an@usd.edu.;2. Department of Economics, Finance & Legal Studies, University of Alabama, Tuscaloosa, AL 35487 or dcook@cba.ua.edu.;3. Department of Economics, Finance & Legal Studies, University of Alabama, Tuscaloosa, AL 35487 or lzumpano@cba.ua.edu. |
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| Abstract: | Using a panel data set of Real Estate Investment Trusts (REITs), we find corporate transparency to be positively associated with REIT growth. These results suggest that greater transparency facilitates firm growth by relaxing information‐based constraints on external financing. The magnitude of this effect is larger in the equity market than in the debt market. Moreover, the sensitivity of investment to cash flows is decreasing in transparency, evidence that transparency relaxes liquidity constraints. Finally, we find more transparent REITs are less likely to crash. |
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