Manipulation in U.S. REIT Investment Performance Evaluation: Empirical Evidence

We investigate whether Real Estate Investment Trust (REIT) managers actively manipulate performance measures in spite of the strict regulation under the REIT regime. We provide empirical evidence that is consistent with this hypothesis. Specifically, manipulation strategies may rely on the opportunistic use of leverage. However, manipulation does not appear to be uniform across REIT sectors and seems to become more common as the level of competition in the underlying property sector increases. We employ a set of commonly used traditional performance measures and a recently developed manipulation-proof measure (MPPM, Goetzmann, Ingersoll, Spiegel, and Welch (2007)) to evaluate the performance of 147 REITs from seven different property sectors over the period 1991-2009. Our findings suggest that the existing REIT regulation may fail to mitigate a substantial agency conflict and that investors can benefit from evaluating return information carefully in order to avoid potentially manipulative funds.

An Empirical Analysis of Performance Impacts Resulting From Conversion to Franchise Operations

Franchising is an important form of organizational control. Possible benefits of franchising include its ability to reduce agency costs that increase with costly monitoring, and provide incentives for the use of local information by onsite managers. However, these benefits may come at a cost, as franchisees may reduce quality by choosing to free ride. While many studies have investigated the reasons for franchising, few studies have documented the impacts of franchising on unit level operating performance. Using time-series data from a number of lodging properties that were converted to franchisee control from company control, this study documents the performance impacts of franchising. The analysis reveals that conversion results in a modest decline in financial performance and an immediate sharp decline in quality.

Asset Management and Investment Banking

We find evidence that conflicts of interest are pervasive in the asset management business owned by investment banks. Using data from 1990 to 2008, we compare the alphas of mutual funds, hedge funds, and institutional funds operated by investment banks and non-bank conglomerates. We find that, while no difference exists in performance by fund type, being owned by an investment bank reduces alphas by 46 basis points per year in our baseline model. Making lead loans increases alphas, but the dispersion of fees across portfolios decreases alphas. The economic loss is $4.9 billion per year.

Error Recovery Performance: The Impact of Leader Behavioral Integrity and Job Satisfaction

This article introduces the concept of error recovery performance, followed by the development and validation of an instrument to measure it. The first objective of this article is to broaden the current concept of service recovery to be relevant to the back-of-house operations. The second objective is to examine the influence of leader behavioral integrity (BI) on error recovery performance. Moreover, the study examines the mediating effect of job satisfaction between BI and error recovery performance. Finally, the study links error management performance with work-unit effectiveness. Data for Study 1 were collected from 369 hotel employees in Turkey. The same relationships were tested again in Study 2 to validate the findings of Study 1 with a different sample. Data for Study 2 were collected from 33 departmental managers from the same hotels. Linear regression analysis was used to test the direct effects. The mediating effects were tested using the mediation test suggested by Preacher and Hayes. In addition, in Study 2, general managers of the hotels were asked to rate the effectiveness of each manager and their respective department. Results from Study 1 indicate that BI drives error recovery performance, and this impact is mediated by employee job satisfaction. Results of Study 2 confirm this model and finds further that managers’ self-rated error recovery performance was associated with their general managers’ assessment of their deliverables and of their department’s overall performance.

Hospitality Management Accounting: Current Problems and Future Opportunities

This paper discusses areas for future research opportunities by addressing accounting issues faced by management accountants practicing in hospitality organizations. Specifically, the article focuses on the use of the uniform system of accounts by operating properties, the usefulness of allocating support costs to operated departments, extending our understanding of operating costs and performance measurement systems and the certification of practicing accountants.