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Impact of Agency Issues on Australian REIT Performance

Author/s: David Parker

Date Published: 1/01/2009

Published in: Volume 15 - 2009 Issue 2 (pages 244 - 255)

Abstract

The study seeks to investigate agency issues in the context of AREITs through consideration of price increases and price decreases relative to CEO motivation by self interest and Board independence, controlled for sector and geographic portfolio weighting. Data for price increases in the period July 2006 to December 2006 and price decreases in the period October 2007 to March 2008 for the forty largest AREITs by market capitalization on 30th May 2008 was correlated against data for sectoral and geographic portfolio composition, CEO shareholding and four proxy variables for Board independence. Only 40% of the hypothesized correlations were found to be supported, with none of the hypothesized correlations between price increase or price decrease and related party shareholdings or extent to which an AREIT may be considered a family business found to be supported.

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Keywords

Board - Control - Governance - Management - Performance - Reit

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