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

Author

Listed:
  • Paul Anglin
  • Robert Edelstein
  • Yanmin Gao
  • Desmond Tsang

Abstract

Recent research suggests that the unique legal and organizational structure of Real Estate Investment Trusts (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 from the 2003 to 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.

Suggested Citation

  • Paul Anglin & Robert Edelstein & Yanmin Gao & Desmond Tsang, 2011. "How Does Corporate Governance Affect the Quality of Investor Information? The Curious Case of REITs," Journal of Real Estate Research, Taylor & Francis Journals, vol. 33(1), pages 1-24, January.
    • Handle: RePEc:taf:rjerxx:v:33:y:2011:i:1:p:1-24
    DOI: 10.1080/10835547.2011.12091298
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    2. George D. Cashman & David M. Harrison & Michael J. Seiler & Hainan Sheng, 2019. "The Impact of Geographic and Cultural Dispersion on Information Opacity," The Journal of Real Estate Finance and Economics, Springer, vol. 59(2), pages 166-208, August.
    3. 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.
    4. S. Price & Jesus Salas & C. Sirmans, 2015. "Governance, Conference Calls and CEO Compensation," The Journal of Real Estate Finance and Economics, Springer, vol. 50(2), pages 181-206, February.
    5. 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.
    6. 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.
    7. Shahid, Muhammad Sadiq & Abbas, Muhammad, 2019. "Does corporate governance play any role in investor confidence, corporate investment decisions relationship? Evidence from Pakistan and India," Journal of Economics and Business, Elsevier, vol. 105(C).
    8. Daniel Broxterman & Tingyu Zhou, 2023. "Correction to: Information Frictions in Real Estate Markets: Recent Evidence and Issues," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 299-299, February.
    9. Elizabeth Devos & Erik Devos & Seow Eng Ong & Andrew C. Spieler, 2016. "Who Follows REITs?," Journal of Real Estate Research, Taylor & Francis Journals, vol. 38(1), pages 129-164, January.
    10. Honghui Chen & David M. Harrison & Mahsa Khoshnoud, 2020. "Investors’ Limited Attention: Evidence from REITs," The Journal of Real Estate Finance and Economics, Springer, vol. 61(3), pages 408-442, October.
    11. Elizabeth Devos & Erik Devos & He Li & Desmond Tsang, 2022. "Operating Lease as Alternative Financing for REITs: a Viable Strategy or a Sign of Trouble?," The Journal of Real Estate Finance and Economics, Springer, vol. 65(2), pages 153-180, August.

    More about this item

    JEL classification:

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

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