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| REITs and Their Management: An Analysis
of Organizational Structure, Performance, and Management Compensation Author: Susanne Ethridge Cannon and Stephen C. Vogt Start Page: 297 Abstract: This study examines
possible agency problems in Real Estate Investment Trusts (REITs) by contrasting the
performance, structure, and compensation of the two REIT forms from 1987 to 1992. Results
show that "self-administered" REITs outperformed "advisor" REITs over
the sample period even after adjusting for their greater market risk. Ownership structure
significantly influences market performance of advisor REITs; low insider-owned advisor
REITs both underperform and take on less market risk than other REITs. Ownership does not
affect returns or market risk of self-administered REITs. While advisor compensation and
chief executive officer salary appear to be strongly related to size, and chief executive
officer salary is related to firm performance, there is only limited evidence that
ownership structure affects managerial compensation in either REIT type. |
