The impact of South African real estate investment trust legislation on firm growth and firm value

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dc.contributor.authorCarstens, Rietteen_ZA
dc.contributor.authorWesson, Nicoleneen_ZA
dc.date.accessioned2019-07-22T12:39:52Z
dc.date.available2019-07-22T12:39:52Z
dc.date.issued2019
dc.descriptionCITATION: Carstens, R. & Wesson, N. 2019. The impact of South African real estate investment trust legislation on firm growth and firm value. South African Journal of Economic and Management Sciences, 22(1):a2257, doi:10.4102/sajems.v22i1.2257.
dc.descriptionThe original publication is available at https://sajems.org
dc.descriptionPublication of this article was funded by the Stellenbosch University Open Access Fund
dc.description.abstractBackground: Through the introduction of the South African real estate investment trust (SA REIT) structure, listed property investment firms are required to conform to international REIT standards, thereby making REITs more attractive to investors. Despite the exponential growth of the SA REIT industry over the past decade, SA REIT legislation – effective from 2013 – has imposed regulations with regard to financial leverage and profit retention, which may affect these firms’ sustainable growth rate and firm value. Aim: By deconstructing the sustainable growth rate, we investigated the potential impact of SA REIT legislation on growth rate components and considered the impact of each growth component on firm value. Setting: The introduction of SA REIT legislation provides an opportunity to investigate how regulation has affected REIT growth and value. Methods: We investigated changes in the respective sustainable growth rate components using a mixed model analysis of variance. Additionally, we employed a panel regression to assess the impact of each component on firm value (proxied by Tobin Q). Results: We found empirical evidence of decreased leverage and profit retention, as well as increased profit margins, in the REIT period, which may be indicative of firms’ reaction to regulation. In addition, we found that profit retention had a significant positive impact on firm value, while leverage showed a significant negative effect on firm value post-legislation. Conclusion: This study confirmed a significant change in growth components, with higher average profitability and sustainable growth in the REIT period, suggesting that the REIT industry responded positively to the REIT regime introduction.en_ZA
dc.description.urihttps://sajems.org/index.php/sajems/article/view/2257
dc.description.versionPublisher's version
dc.format.extent8 pages ; illustrations
dc.identifier.citationCarstens, R. & Wesson, N. 2019. The impact of South African real estate investment trust legislation on firm growth and firm value. South African Journal of Economic and Management Sciences, 22(1):a2257, doi:10.4102/sajems.v22i1.2257
dc.identifier.issn2222-3436 (online)
dc.identifier.issn1015-8812 (print)
dc.identifier.otherdoi:10.4102/sajems.v22i1.2257
dc.identifier.urihttp://hdl.handle.net/10019.1/106319
dc.language.isoen_ZAen_ZA
dc.publisherAOSIS
dc.rights.holderAuthors retain copyright
dc.subjectSA REITen_ZA
dc.subjectReal estate investment trusts -- Law and legislation -- South Africaen_ZA
dc.subjectReal estate investment trusts -- Law and legislation -- Economic aspectsen_ZA
dc.subjectEnterprise value -- South Africaen_ZA
dc.subjectEnterprise growth -- South Africaen_ZA
dc.titleThe impact of South African real estate investment trust legislation on firm growth and firm valueen_ZA
dc.typeArticleen_ZA
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