Corporate Transparency and Firm Growth : Evidence from Real Estate Investment Trusts (REITs)

Using a panel data set of Real Estate Investment Trusts (REITs), we find corporate transparency to be positively associated with REIT growth. These results suggest that greater transparency facilitates firm growth by relaxing information-based constraints on external financing. The magnitude of this effect is larger in the equity market than in the debt market. Moreover, the sensitivity of investment to cash flows is decreasing in transparency, evidence that transparency relaxes liquidity constraints. Finally, we find more transparent REITs are less likely to crash, a result that is consistent with Jin and Myers (2006)