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How Does Corporate Governance Affect the Quality of Investor Information? The Curious Case of REITs

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Author Info

  • Paul Anglin

    ()
    (University of Guelph)

  • Robert Edelstein

    ()
    (University of California at Berkeley)

  • Yanmin Gao

    ()
    (University of Alberta)

  • Desmond Tsang

    ()
    (McGill University)

Registered author(s):

    Abstract

    Recent research suggests that the unique legal and organizational structure of REITs, relative to other types of corporations, may vitiate the need for and the effectiveness of internal corporate governance. Our results indicate that information asymmetry, as measured by the percentage bid-ask spreads demanded by the market, is reduced by appropriately structured REIT governance. Using data during the 2003-2006 period, we find that increasing the financial incentives for board members reduces asymmetric information, and that the combination of experienced board members and independent audit committees with financial expertise diminishes asymmetric information.

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    File URL: http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/new_current/vol33n01/01.1_24.pdf
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    Bibliographic Info

    Article provided by American Real Estate Society in its journal journal of Real Estate Research.

    Volume (Year): 33 (2011)
    Issue (Month): 1 ()
    Pages: 1-24

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    Handle: RePEc:jre:issued:v:33:n:1:2011:p:1-24

    Contact details of provider:
    Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
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    Web page: http://www.aresnet.org/

    Order Information:
    Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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    Web: http://aux.zicklin.baruch.cuny.edu/jrer/about/get.htm

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Ko Wang & John Erickson & Su Han Chan, 1995. "Does the REIT Stock Market Resemble the General Stock Market?," Journal of Real Estate Research, American Real Estate Society, vol. 10(4), pages 445-460.
    2. Bing Han, 2006. "Insider Ownership and Firm Value: Evidence from Real Estate Investment Trusts," The Journal of Real Estate Finance and Economics, Springer, vol. 32(4), pages 471-493, June.
    3. Ross, Stephen A, 1989. " Information and Volatility: The No-Arbitrage Martingale Approach to Timing and Resolution Irrelevancy," Journal of Finance, American Finance Association, vol. 44(1), pages 1-17, March.
    4. Jay C. Hartzell & Jarl G. Kallberg & Crocker H. Liu, 2008. "The Role of Corporate Governance in Initial Public Offerings: Evidence from Real Estate Investment Trusts," Journal of Law and Economics, University of Chicago Press, vol. 51(3), pages 539-562, 08.
    5. Scott D. Below & Joseph K. Kiely & Willard McIntosh, 1995. "An Examination of Informed Traders and the Market Microstructure of Real Estate Investment Trusts," Journal of Real Estate Research, American Real Estate Society, vol. 10(3), pages 335-361.
    6. H. Swint Friday & G. Stacy Sirmans, 1998. "Board of Director Monitoring and Firm Value in REITs," Journal of Real Estate Research, American Real Estate Society, vol. 16(3), pages 411-427.
    7. Chung, Kee H. & Elder, John & Kim, Jang-Chul, 2010. "Corporate Governance and Liquidity," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 45(02), pages 265-291, April.
    8. Glascock, John L & Hughes, William T, Jr & Varshney, Sanjay B, 1998. "Analysis of REIT IPOs Using a Market Microstructure Approach: Anomalous Behavior or Asset Structure," The Journal of Real Estate Finance and Economics, Springer, vol. 16(3), pages 243-56, May.
    9. McDonald, Cynthia G & Nixon, Terry D & Slawson, V Carlos, Jr, 2000. "The Changing Asymmetric Information Component of REIT Spreads: A Study of Anticipated Announcements," The Journal of Real Estate Finance and Economics, Springer, vol. 20(2), pages 195-210, March.
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    21. Mark L. Defond & Rebecca N. Hann & Xuesong Hu, 2005. "Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?," Journal of Accounting Research, Wiley Blackwell, vol. 43(2), pages 153-193, 05.
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    Cited by:
    1. Patrick Lecomte & Joseph Ooi, 2013. "Corporate Governance and Performance of Externally Managed Singapore Reits," The Journal of Real Estate Finance and Economics, Springer, vol. 46(4), pages 664-684, May.
    2. Wen-Hsiu Chou & William Hardin & Matthew Hill & G. Kelly, 2013. "Dividends, Values and Agency Costs in REITs," The Journal of Real Estate Finance and Economics, Springer, vol. 46(1), pages 91-114, January.
    3. Paul Anglin & Robert Edelstein & Yanmin Gao & Desmond Tsang, 2013. "What is the Relationship Between REIT Governance and Earnings Management?," The Journal of Real Estate Finance and Economics, Springer, vol. 47(3), pages 538-563, October.

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