REAL ESTATE INVESTMENT TRUSTS: INTEREST RATES, TRADING VOLUME, AND COMPETITIVE ADVANTAGE

Ronald A. Stunda
Valdosta State University
ABSTRACT
This study attempts to associate a comparison between real estate investment trust
(REIT) 100 index stocks and S&P 500 index stocks so that it might be determined if a competitive
advantage exists by firms in either index with respect to trading volume and/or interest rates. A
study period of 1997-2013 is evaluated. Findings indicate that when composite stock price
changes are evaluated for each index group during high volume trading days, firms in the REIT
index have a greater stock price reaction, almost double that of the Standard and Poor (S&P)500
firms. When the study period is segmented into high interest rate and low interest rate periods,
findings show that REIT 100 firms have significantly positive stock price changes during periods
of relatively low interest rates and significantly negative stock price changes during periods of
high interest rates while S&P 500 firms seem unaffected by movement in interest rates.