Corporate Governance and Performance: the REIT Effect

Piet Eichholtz, Rob Bauer and Nils Kok
Additional contact information
Piet Eichholtz: Maastricht U

Working Papers from University of Pennsylvania, Wharton School, Weiss Center

Abstract: REITs offer a natural experiment in corporate governance due to the fact that they leave little free cash flow for management, which reduces agency problems. We exploit a unique and leading corporate governance database to test whether corporate governance matters for the performance of U.S. REITs. We document for a sample including governance ratings of more than 220 REITs that firm value is significantly related to firm-level governance for REITs with low payout ratios only. Repeating the analysis with the complete database that includes more than 5,000 companies, and a control sample of firms with high corporate real estate ratios, we find a strong and significantly positive relation between our governance index and several performance variables, indicating that the partial lack of a relation between governance and performance in the real estate sector might be explained by a REIT effect.

JEL-codes: G12 (search for similar items in EconPapers)
Date: 2008-03
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://onlinelibrary.wiley.com/doi/10.1111/j.1540- ... BF3667B3C84FC.f02t02

Related works:
Journal Article: Corporate Governance and Performance: The REIT Effect (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:upafin:08-3

Access Statistics for this paper

More papers in Working Papers from University of Pennsylvania, Wharton School, Weiss Center Contact information at EDIRC.
Bibliographic data for series maintained by ().