Do Managerial Motives Impact Dividend Decisions in Reits?

Posted: 6 Nov 2005

See all articles by Chinmoy Ghosh

Chinmoy Ghosh

University of Connecticut - Department of Finance

C. F. Sirmans

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

Abstract

Conflict of interest between shareholders (principal) and managers (agent) is a potential weakness of the modern corporate form. Various monitoring mechanisms - pay for performance compensation schemes, mix of cash compensation and long term compensation, the independence of the board of directors, the market for takeovers, and capital structure - have been developed to discipline management and motivate them to maximize shareholder wealth. We test the hypothesis that dividend payout levels reflect the quality of and motivation for managerial decision making and are a function of performance and monitoring effectiveness. Consistent with this hypothesis, our analyses indicate that dividend payout, and dividend yield are functions of corporate performance, board structure, CEO tenure, and CEO ownership of company shares.

Keywords: Dividend policy, managerial incentive, monitoring

Suggested Citation

Ghosh, Chinmoy and Sirmans, C. F., Do Managerial Motives Impact Dividend Decisions in Reits?. Journal of Real Estate Finance and Economics, Vol. 32, No. 3, 2006, Available at SSRN: https://ssrn.com/abstract=833364

Chinmoy Ghosh (Contact Author)

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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