The Determinants of REIT Cash Holdings

  • William G. HardinIII
  • Michael J. Highfield
  • Matthew D. Hill
  • G. Wayne Kelly


The factors influencing the cash holdings of REITs are examined with the view that the REIT industry should yield new information regarding the drivers of corporate cash policy due to their unique operating conditions. The availability of REIT line of credit data also allows us to test the association between cash holdings and line of credit access and use. Data constraints in prior investigations have left this an unresolved empirical question in the cash holdings literature. The baseline results show that REIT cash holdings are inversely related to funds from operations, leverage, and internal advisement and are directly related to the cost of external finance and growth opportunities. Cash holdings are also negatively associated with credit line access and use. The results imply that REIT managers elect to hold little cash to reduce the agency problems of cash flow thereby increasing transparency and reducing the future cost of external capital.


REIT Cash Liquidity Cash flow Working capital 

JEL Classification

G12 G14 G24 


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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • William G. HardinIII
    • 1
  • Michael J. Highfield
    • 2
  • Matthew D. Hill
    • 3
  • G. Wayne Kelly
    • 2
  1. 1.Department of Finance, College of Business AdministrationFlorida International UniversityMiamiUSA
  2. 2.Department of Finance and Economics, College of Business and IndustryMississippi State UniversityStarkvilleUSA
  3. 3.Department of Finance, School of Business AdministrationUniversity of MississippiOxfordUSA

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