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"Pyles, Mark K"
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Market and Institutional Ownership Reactions to REIT Security Issuances
This paper examines market and institutional ownership reactions to REIT security issuances. Specifically, we examine the short- and long-term market performance of issuing REITs compared to their non-issuing counterparts. We additionally examine changes in systematic and idiosyncratic risk curtailing from security issuances as well as institutional ownership shifts stemming from the sale of new securities. We find that equity issuances are met with negative market reaction in the event window, while there is no significant immediate market reaction to debt issuances. Buy-and-hold abnormal returns are generally higher for equity issuers in comparison to debt-issuing and non-issuing firms. We also find that equity issuances increase systematic risk exposure while both types of security issuances reduce idiosyncratic risk. Finally, we document that serial issuers of both equity and debt see increases in institutional investment following issuances.
Journal Article
Equity versus Asset Acquisitions in the REIT Industry
Real estate investment trust (REIT) acquisitions are recurrent capital allocation decisions that impact the value and operations of the firm. Although REIT equity acquisitions have received considerable attention in the literature, the effects of major asset acquisitions require further scrutiny. We examine the impact of acquisition type on REIT market returns and operating performance. The results suggest no significant differences in market reaction to the form of acquisition. We interpret this as evidence in favor of efficiency in REIT acquisition decisions. However, the results suggest a net positive effect in operating performance of asset acquisitions relative to equity acquisitions, conditioned by firm and deal characteristics. Overall, our results suggest that asset acquisitions are more efficient in the long run. We provide evidence that the type of acquisition is relevant to firm operations.
Journal Article
GIPS and Hedge Funds: Is Compliance a Certification Agent?
This study examines a sample of global hedge funds and focuses on analyzing characteristics consistently predictive of being GIPS compliant. Hedge fund data are merged with the CFA Institute’s list of GIPS-compliant firms. The authors find that smaller funds, with less experienced managers and those not denominated in US currency, are more likely to be compliant. They also find that firms with a strong internal control mechanism, defined as having one of the big four accounting firms as an auditor, are more likely to claim compliance. Turning to some core elements of the investor–fund relationship, they find performance fees are lower in firms claiming compliance, but past performance is insignificantly different. Collectively, the results suggest that GIPS compliance is useful to smaller and riskier firms that want to display confidence and transparency in their performance, thus supporting the notion that compliance is an additional certification agent. There is also some evidence to suggest a benefit to the investor in lower fees. Key Findings ▪ The minority number of hedge funds that chose to be compliant prior to the revised GIPS standards of 2020 are typically relatively smaller, have less-experienced managers, and are based in non-US currency. ▪ Compliant firms have smaller performance fees, resulting in a lower overall fee structure, compared to their noncompliant counterparts. ▪ Results are consistent with the notion that funds that chose compliance are those that could benefit from the additional certification it could provide.
Journal Article
Seasonal affective disorder and the pricing of IPOs
Purpose - It has been found that stock market returns vary seasonally with the amount of daylight, and they attribute this effect to seasonal affective disorder (SAD), which is a psychological condition that causes depression and heightened risk aversion during the fall and winter months. The goal of this study is to examine whether this effect also manifests itself in the pricing of initial public offerings (IPOs).Design methodology approach - The authors conduct an empirical analysis on IPO data collected over the period 1986-2000. Specifically, we examine potential pricing differences between IPO that go public during the fall and winter months, relative to other issues. The paper begins by exploring differences on a univariate basis (i.e. testing via t-statistics), subsequently extending the analysis by controlling for firm and offer characteristics in a multiple regression framework.Findings - The paper finds that IPOs experience higher levels of underpricing in both the fall and winter months and that offer price revisions are higher during the winter months. Both of these results are consistent with SAD influencing the IPO pricing process.Originality value - The results suggest that behavioral issues (i.e. the emotions of buyers) may have as much of an effect on the pricing of IPOs as more traditional characteristics. Further, the results imply that firms with flexible issuance schedules should avoid going public during months affected by SAD, thereby potentially reducing the cost of issuance.
Journal Article
Economic Effects of Smoke-Free Laws on Rural and Urban Counties in Kentucky and Ohio
Introduction:
Numerous empirical studies have examined the influence of smoke-free legislation on economic activity, with most finding a null effect. The influence could possibly differ in rural areas relative to urban areas due to differing rates of smoking prevalence and access to prevention and treatment programs. Furthermore, the discussion of the effectiveness of smoke-free laws has been extended to consider local ordinances relative to statewide laws. This study examines these issues using 21 local laws in Kentucky and the Ohio statewide smoke-free law.
Methods:
The number of employees, total wages paid, and number of reporting establishments in all hospitality and accommodation services in Kentucky and Ohio counties were documented, beginning the first quarter 2001 and ending the last quarter of 2009. A generalized estimating equation time-series design is used to estimate the impact of local and state smoke-free laws in Kentucky and Ohio rural and urban counties.
Results:
There is no evidence that the economies in Kentucky counties were affected in any way from the implementation of local smoke-free laws. There was also no evidence that total employment or the number of establishments was influenced by the statewide law in Ohio, but wages increased following the implementation of the law. Furthermore, there is no evidence that either rural or urban counties experienced a loss of economic activity following smoke-free legislation.
Conclusions:
The study finds no evidence that local or state smoke-free legislation negatively influences local economies in either rural or urban communities.
Journal Article
Financial Constraint and Cash Holdings in the REIT Industry
We extend the line of research on the influence of financial constraint on REIT cash holdings and their market value. We measure constraint with a wide variety of traditional proxies in an effort to determine if previous results hold and provide guidance on the use of these constraint measures in REIT studies. We confirm, consistent with both expectation and the literature, that constrained firms hold more cash than their unconstrained counterparts. However, contrary to previous works, we find little evidence that traditional measures of constraint play a role in the market value of cash. Further, our results suggest that the method of measuring constraint should be carefully considered when applying to the REIT industry. In particular, the KZ index provides results that differ substantially from those of other criteria.
Journal Article
Economic effects of Ohio's smoke-free law on Kentucky and Ohio border counties
ObjectiveTo determine if the Ohio statewide smoke-free law is associated with economic activity in Ohio or Kentucky counties that lie on the border between the two states. In November 2006, Ohio implemented a comprehensive statewide smoke-free law for all indoor workplaces.DesignA feasible generalised least squares (FLGS) time series design to estimate the impact of the Ohio smoke-free law on Kentucky and Ohio border counties.SettingSix Kentucky and six Ohio counties that lie on the border between the two states.SubjectsAll reporting hospitality and accommodation establishments in all Kentucky and Ohio counties including but not limited to food and drinking establishments, hotels and casinos.Main outcome measuresTotal number of employees, total wages paid and number of reported establishments in all hospitality and accommodation services, 6 years before Ohio's law and 1 year after.ResultsThere is no evidence of a disproportionate change in economic activity in Ohio or Kentucky border counties relative to their non-border counterparts. There was no evidence of a relation between Ohio's smoke-free law and economic activity in Kentucky border counties. The law generated a positive influence on wages and number of establishments in Ohio border counties. The null result cannot be explained by low test power, as minimum changes necessary in the dependent variables to detect a significant influence are very reasonable in size.ConclusionsOur data add to the large body of evidence that smoke-free laws are neutral with respect to the hospitality business across jurisdictions with and without laws.
Journal Article
REIT IPOs and the Cost of Going Public
We examine Initial Public Offerings (IPOs) of Real Estate Investment Trusts (REITs) that went public between 1986 and 2004. Consistent with previous studies, we find that REIT IPOs are associated with lower levels of underpricing relative to traditional issues. We also find that REITs are associated with smaller file price revisions. Both findings are potentially attributable to the lower level of uncertainty associated with pricing REITs. In contrast, using an alternative measure of issuance costs that incorporates the share retention decision by preexisting owners, we find no significant difference between REIT and non-REIT issues, suggesting the results of previous studies are not robust to various specifications of issuance cost and that preexisting owners do not necessarily benefit from the lower level of underpricing. Additionally, we find no difference in the issuance costs of equity versus mortgage REITs, particularly once we control for the use of umbrella partnerships.
Journal Article
Seeking Alphas from Underperforming Stocks: The Corporate Governance Perspective
When a firm's stock is underperforming, the likelihood of recovery and what drives the recovery should be of interest to both academics and practitioners. In this article, the authors find the number of options in top executives' compensation to be positively associated with the chance of improvement, while firm earnings management has a negative influence. Utilizing these findings, the authors create portfolios that can achieve annualized abnormal returns in the range of 5% to 23%, significantly higher than those from a simple buying-loser trading strategy.
Journal Article