Ownership Dynamics with Multiple Insiders: The Case of REITs |
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| Authors: | Robert H Edelstein Antoni Sureda-Gomila Branko Uro&#;evi&#; Nicholas Wonder |
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| Institution: | Fisher Center for Real Estate, Haas School of Business, University of California, Berkeley, CA 94720 or .;Department of Economics and Business, Universitat Pompeu Fabra, 08005 Barcelona, Spain or .;Faculty of Economics and SECCF, University of Belgrade, 11000 Belgrade, Serbia or .;College of Business and Economics, Western Washington University, Bellingham, WA 98225-9073 or . |
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| Abstract: | We study ownership dynamics of multiple strategic risk-averse insiders facing a moral hazard problem. We show that, when insiders cannot commit, ex ante , to an ownership policy, the aggregate insider stake gradually declines toward the competitive market allocation. Both the speed of adjustment and the long-term equilibrium aggregate insider ownership level are greater for companies with a larger number of insiders, ceteris paribus . Using data from U.S. real estate investment trusts, we then test the model and find that the predictions of the model are verified empirically. |
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