Correction to: The Journal of Real Estate Finance and Economics

https://doi.org/10.1007/s11146-024-09989-w

The original online version of this article was revised to delete the last paragraph below:

While the existing literature documents a positive effect of environmentally-sustainable investments on the financial performance of REITs, the underlying mechanisms are not clear. In their paper “Impact of Environmental Investments on Corporate Financial Performance: Decomposing Valuation and Cash Flow Effects”, Avis Devine & Erkan Yönder attempt to disentangle the cash flow effect and stock market valuation effect of investing in green buildings on REIT corporate performance. They find U.S. REITs that own more green-certified properties in their portfolio reported higher cash flows (due to higher rental revenue and net operating income) as well as higher stock valuation beyond the improved operating cash flows (due to lower risks and enhanced reputation). In particular, they find REITs with a higher share of green properties experienced lower interest expenses on their debt, lower stock trading volume (for office and retail properties) and lower risk exposure to stock markets.

The original article has been corrected.