Faculty Publications


Capital distribution policy and information asymmetry: A real estate market perspective.

SelectedWorks Author Profiles:

Gary A. Patterson

Document Type


Publication Date


Date Issued

January 2000

Date Available

August 2014




This article examines the relation between the distribution of capital to real estate investors and a market-based measure of information asymmetry. Previous research suggests that information asymmetries decrease as capital is distributed to outside investors. However, little attention has been given to those firms for which the marginal benefit of increased distributions may be small. Our analyses are based on a sample of real estate investment trusts (REITs), which are popularly characterized as high yield investments due to the regulation of a minimum distribution policy. The extent to which information asymmetry is influenced by these regulations, as well as by the opaque nature of the underlying assets, is an interesting empirical question. The results based on several years of data indicate that the perception of asymmetric information is lower for REITs that distribute more capital to their shareholders. A decomposition of yield into income and return-of-capital components reveals no differential effect in information relevance. The insights drawn from the results may be useful in determining the efficacy of real estate capital distribution policies and regulations.


Citation only. Full-text article is available through licensed access provided by the publisher. Published in The Journal of Real Estate Finance and Economics, 21, 235-250. doi: 10.1023/A:1012099602585. Members of the USF System may access the full-text of the article through the authenticated link provided.