Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/254189 
Year of Publication: 
2020
Citation: 
[Journal:] European Journal of Management and Business Economics (EJM&BE) [ISSN:] 2444-8451 [Volume:] 29 [Issue:] 1 [Publisher:] Emerald [Place:] Bingley [Year:] 2020 [Pages:] 110-122
Publisher: 
Emerald, Bingley
Abstract: 
Purpose The purpose of this paper is to investigate whether real estate investment trusts (REITs) have any significant cost-efficiency advantages over real estate operating companies (REOCs). Design/methodology/approach The data for listed companies were extracted from the Bloomberg terminal. The authors analyzed financial ratios and conducted a non-parametric data envelope analysis (DEA) for 534 firms in the USA, Canada and some EU member states. Findings The results suggest that REITs were much more cost-efficient than REOCs by all the parameters in the DEA model during the entire three-year period under consideration. Although the debt-to-equity levels were similar, REOCs were more relying on short-term than long-term maturities, which made them more vulnerable against market corrections or shocks. Being larger in asset size did not necessarily guarantee greater economies of scale. Both - the cases of increasing economies of scale and diseconomies - were detected. The time period 2015-2017 showed the general trend of decreasing efficiency. Originality/value Very few papers on the topic of REITs have attempted to find out whether a different firm structure displays any differences in efficiency. Because the question of REITs and sustainable growth of the real estate market has become a prominent issue, this research can help EU countries to consider the option of adopting a REIT system. If this system were successfully implemented, the EU member states could benefit from a more sustainable and more rapid growth of their real estate markets.
Subjects: 
Efficiency
DEA
REITs
Real estate
REOCs
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article

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