Ownership Dynamics with Multiple Insiders: The Case of REITs

  1. Robert H. Edelstein1,
  2. Antoni Sureda-Gomila2,
  3. Branko Urošević3,
  4. Nicholas Wonder4

Article first published online: 5 NOV 2009

DOI: 10.1111/j.1540-6229.2009.00254.x

Issue

Real Estate Economics

Real Estate Economics

Volume 38, Issue 1, pages 57–90, Spring 2010

Additional Information

How to Cite

Edelstein, R. H., Sureda-Gomila, A., Urošević, B. and Wonder, N. (2010), Ownership Dynamics with Multiple Insiders: The Case of REITs. Real Estate Economics, 38: 57–90. doi: 10.1111/j.1540-6229.2009.00254.x

Author Information

  1. 1

    Fisher Center for Real Estate, Haas School of Business, University of California, Berkeley, CA 94720 or edelstei@haas.berkeley.edu.

  2. 2

    Department of Economics and Business, Universitat Pompeu Fabra, 08005 Barcelona, Spain or antoni.sureda@upf.edu.

  3. 3

    Faculty of Economics and SECCF, University of Belgrade, 11000 Belgrade, Serbia or urosevic@one.ekof.bg.ac.yu.

  4. 4

    College of Business and Economics, Western Washington University, Bellingham, WA 98225-9073 or nicholas.wonder@wwu.edu.

Publication History

  1. Issue published online: 17 FEB 2010
  2. Article first published online: 5 NOV 2009

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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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