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ECONOMIES OF SCALE AND COST EFFICIENCIES: A PANEL‐DATA STOCHASTIC‐FRONTIER ANALYSIS OF REAL ESTATE INVESTMENT TRUSTS *
Author(s) -
MILLER STEPHEN M.,
CLAURETIE TERRENCE M.,
SPRINGER THOMAS M.
Publication year - 2006
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2006.00505.x
Subject(s) - inefficiency , real estate investment trust , diseconomies of scale , economics , panel data , economies of scale , econometrics , real estate , leverage (statistics) , scale (ratio) , investment (military) , stochastic frontier analysis , frontier , financial economics , monetary economics , microeconomics , finance , computer science , production (economics) , physics , quantum mechanics , machine learning , politics , political science , law , archaeology , history
This paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate a stochastic‐frontier, panel‐data model specifying a translog cost function, covering 1995–2003. The results disagree with previous research in that we find little evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, the results also show that self‐management of a REIT associates with more inefficiency when we measure output with assets. When we use revenue to measure output, self‐management associates with more efficiency. Also contrary to previous research, higher leverage associates with more efficiency. The results further suggest that inefficiency increases over time in three of our four specifications.