CEO Involvement in Director Selection: Implications for REIT Dividend Policy

Posted: 11 Sep 2007

See all articles by Zhilan Feng

Zhilan Feng

Union College

Chinmoy Ghosh

University of Connecticut - Department of Finance

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law

Abstract

This paper examines the relationship between CEO entrenchment and dividend policy of Real Estate Investment Trusts (REITs). We develop and index for CEO entrenchment using CEO tenure and duality and find that this index has significant impact on dividend policy. We further separate our sample into two sub-groups: REITs with and without nomination committees. Our analyses show a strong positive relationship between CEO entrenchment level and dividend payout for REITs without a nomination committee. In REITs with nomination committees, CEO entrenchment has less influence on dividend policy. We conclude that dividend policy serves as a substitution for other governance mechanisms. Further, our results are consistent with the evidence for other US firms - CEO that are more entrenched pay higher dividends to avoid shareholder sanctions and the threat of takeover.

Keywords: CEO involvement, director selection, nomination committee, dividend policy

Suggested Citation

Feng, Zhilan and Ghosh, Chinmoy and Sirmans, C. F., CEO Involvement in Director Selection: Implications for REIT Dividend Policy. Journal of Real Estate Finance and Economics, Vol. 35, No. 4, 2007, Available at SSRN: https://ssrn.com/abstract=1010339

Zhilan Feng (Contact Author)

Union College ( email )

Schenectady, NY 12308-3151
United States

Chinmoy Ghosh

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-486-3040 (Phone)
860-486-0349 (Fax)

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law ( email )

Tallahasse, FL 32306
United States
850 644-4076 (Phone)

HOME PAGE: http://www.cob.fsu.edu/rmi

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