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Corporate Governance and the Leverage of REITs: the Impact of the Advisor Structure

Author

Listed:
  • Nicolai C. Striewe

    (EBS Universität für Wirtschaft und Recht i. Gr.)

  • Nico B. Rottke

    (BS Universität für Wirtschaft und Recht i. Gr.)

  • Joachim Zietz

    (EBS Universität für Wirtschaft und Recht i. Gr.)

Abstract

The paper examines the impact of the advisor structure on the leverage of 265 US real estate investment trusts (REITs). The study employs panel data for the period 1994 to 2010. Externally advised REITs tend to choose lower leverage, a result which differs from that of Capozza and Seguin (2000) for the old REIT era (1985-1992). We find no evidence for an agency problem related to the choice of leverage for more recent data. The lower leverage makes economic sense since externally advised REITs bear higher costs of debt than their internally advised counterparts.

Suggested Citation

  • Nicolai C. Striewe & Nico B. Rottke & Joachim Zietz, 2013. "Corporate Governance and the Leverage of REITs: the Impact of the Advisor Structure," Journal of Real Estate Research, American Real Estate Society, vol. 35(1), pages 103-120.
    • Handle: RePEc:jre:issued:v:35:n:1:2013:p:103-120
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    Cited by:

    1. Kevin Hon Sheng Yap & Seow Eng Ong & Wee Yong Yeo, 2018. "Demystifying the Management Structure Puzzle: an Empirical Investigation into the Drivers of REIT Internalization," The Journal of Real Estate Finance and Economics, Springer, vol. 57(3), pages 367-399, October.
    2. Mamoru Nagano, 2016. "Financing Patterns and Property Acquisitions of Sponsor-backed REITs: Evidence from J-REIT Markets," International Real Estate Review, Global Social Science Institute, vol. 19(2), pages 223-248.
    3. Joseph R. Nicholson & James A. Stevens, 2022. "REIT Operational Efficiency: External Advisement and Management," The Journal of Real Estate Finance and Economics, Springer, vol. 65(1), pages 127-151, July.
    4. Bao, Helen X.H. & Gong, Cynthia Miao, 2017. "Reference-dependent analysis of capital structure and REIT performance," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 38-49.

    More about this item

    JEL classification:

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

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