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| An Empirical Examination of Compensation
of REIT Managers Author: Marc C. Chopin, Ross N. Dickens, and Roger M. Shelor Start Page: 263 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. |
