2018年 - 2018年 Working Paper: Do Board Turnovers Matter: Evidence from Externally Managed REITs
In recent years, good corporate governance has increasingly become a necessary signal by firms to attract good investors. At the same time, governments around the world are adopting proactive regulatory measures to protect shareholder rights. This paper intends to examine the impact of good corporate governance in real estate, specifically, real estate investment trusts (REITs). To enjoy tax benefits, REITs are heavily regulated in terms of their distribution policy, asset allocation, and ownership composition. As a result, this paper asks whether internal monitoring by board directors are still valued by investors. Adopting an event study and cross section analysis, the results indicate muted market responses to board changes in the short-term. However, there is strong empirical evidence to illustrate that shareholders react negatively to board changes when the firm is doing well. Furthermore, although shareholders do not react to changes of independent board directors, shareholders are concerned about the balance of insiders versus independent directors on the board.