Corporate Governance and Performance in the Market for Corporate Control: The Case of REITs

Posted: 29 Jan 2011

See all articles by Robert D. Campbell

Robert D. Campbell

Hofstra University

Chinmoy Ghosh

University of Connecticut - Department of Finance

Milena T. Petrova

Bocconi University

C. F. Sirmans

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

Date Written: January 28, 2011

Abstract

We examine 132 mergers and acquisitions by Real Estate Investment Trusts (REITs) during 1997-2006 and explore the relationship between acquirer external and internal corporate governance mechanisms and announcement abnormal returns. We argue that in regulated industries with absent active takeover market, the importance of outside governance mechanisms is diminished and substituted by internal governance controls. We focus on the REIT industry. We find that bidder returns are higher for REITs with smaller boards, with more experienced CEOs, but with shorter tenure. Acquirers' announcement returns are also significantly and positively related to higher ownership by their CEOs and board directors. We find no significant relationship between presence of staggered board and abnormal bidder returns, which supports our hypothesis that anti-takeover defense measured have reduced importance for REITs.

Keywords: Corporate Governance, Mergers, Corporate Control, Real Estate Investment Trusts

Suggested Citation

Campbell, Robert D. and Ghosh, Chinmoy and Petrova, Milena T. and Sirmans, C. F., Corporate Governance and Performance in the Market for Corporate Control: The Case of REITs (January 28, 2011). Journal of Real Estate Finance and Economics, Vol. 42, No. 4, 2011, Available at SSRN: https://ssrn.com/abstract=1750212

Robert D. Campbell

Hofstra University ( email )

Hempstead, NY 11549
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)

Milena T. Petrova (Contact Author)

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

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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