Evidence from Tax-Exempt Firms on Motives for Participating in Sale-Leaseback Agreements
Year: 2006
Type: article
Abstract: Previous research finds evidence that tax factors motivate the participants in leasing transactions. Tax-arbitrage arguments predict that leasing participants gain when the lessor's tax rate exceeds that of the lessee. This research employs a sample of effectively tax-exempt Real Estate Investment Trust (REIT) lessors to explore alternative leasing motives. Changes in REIT qualification rules are examined to develop an Agency-Cost and competing Income-Retention Hypothesis for lessors. The rules and changes suggest that REIT management has the incentive, motive, and opportunity to make real estate investments quickly. The evidence developed is consistent with agency costs arising from the possibility that they may overpay for properties.
Source: Journal of Real Estate Research
Authors: Fayez Elayan, Thomas Meyer, Jingyu Li
Institutions: Brock University, Southeastern Louisiana University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1503469455