The Relevance of Earnings and Funds Flow from Operations in the Presence of Transitory Earnings
Document Type
Article
Publication Title
Journal of Real Estate Portfolio Management
ISSN
1083-5547
Volume
10
Issue
1
DOI
10.1080/10835547.2004.12089690
First Page
37
Last Page
45
Publication Date
1-1-2004
Abstract
The real estate investment trust (REIT) industry relies heavily on a cash flow-based measure of performance called funds flow from operation (FFO). FFO is the most widely used measure of performance for REITs, unlike other industries where earnings are used as a benchmark. This paper examines the role that earnings transitivity has on the value-relevance of FFO relative to earnings. The findings indicate that as earnings become more transitive, FFO gains value-relevance, while earnings lose value-relevance. Additionally, both FFO and earnings provide incremental information in the presence of the other.
Recommended Citation
Ronald, S. A.,
&
Typpo, E. W.
(2004).
The Relevance of Earnings and Funds Flow from Operations in the Presence of Transitory Earnings.
Journal of Real Estate Portfolio Management, 10(1), 37–45.
DOI: 10.1080/10835547.2004.12089690
https://scholarlycommons.pacific.edu/esob-facarticles/275
