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An Empirical Examination of Compensation of REIT Managers

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Abstract

Principal-agent literature finds that manager and owner incentives can be aligned with performance contingent contracts. We investigate the compensation of Real Estate Investment Trust (REIT) industry executives. The competitive nature of mortgage and equity markets, in conjunction with the corporate tax exemption available when REITs distribute most of their earnings as dividends, is likely to influence the compensation of REIT managers. Executive compensation is modeled as a function of revenues and unexpected profit. After transforming the model to reduce collinearity and heteroskedasticity, we find compensation to be generally positively related to revenue. We also find unexpected profit to be generally insignificantly related to compensation, but positively related in those cases where it is significant.

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  • Marc C. Chopin & Ross N. Dickens & Roger M. Shelor, 1995. "An Empirical Examination of Compensation of REIT Managers," Journal of Real Estate Research, American Real Estate Society, vol. 10(3), pages 263-278.
    • Handle: RePEc:jre:issued:v:10:n:3:1995:p:263-278
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    Cited by:

    1. Emily Zietz & Stacy Sirmans & Swint Friday, 2003. "The Environment and Performance of Real Estate Investment Trusts," Journal of Real Estate Portfolio Management, Taylor & Francis Journals, vol. 9(2), pages 127-165, January.
    2. Chinmoy Ghosh & C. Sirmans, 2006. "Do Managerial Motives Impact Dividend Decisions in REITs?," The Journal of Real Estate Finance and Economics, Springer, vol. 32(3), pages 327-355, May.
    3. Scott, John L. & Anderson, Randy I. & Webb, James R., 2005. "The labor-leisure choice in executive compensation plans: Does too much pay reduce REIT performance?," Journal of Economics and Business, Elsevier, vol. 57(2), pages 151-163.
    4. Piet Eichholtz & Nils Kok & Roger Otten, 2008. "Executive Compensation in UK Property Companies," The Journal of Real Estate Finance and Economics, Springer, vol. 36(4), pages 405-426, May.
    5. Zifeng Feng & William G. Hardin & Zhonghua Wu, 2024. "REIT Chief Executive Officer (CEO) Compensation in the New Era," The Journal of Real Estate Finance and Economics, Springer, vol. 69(4), pages 651-681, November.
    6. William G. Hardin, III, 1998. "Executive Compensation in EREITs: EREIT Size is But One Determinant," Journal of Real Estate Research, American Real Estate Society, vol. 16(3), pages 401-410.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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