Journal of Accounting and Economics Vol. 17 No. 1-2 1994
Compensation policies and financial characteristics of real estate investment trusts
Abstract
This study shows real estate investment trusts' (REITs) characteristics and compensation incentives vary with compensation method. Formula-based compensation encourages advisors to generate cash from their assets, whereas discretion-based compensation encourages cash conservation. Consequently, dividend yields are 82 percent of formula REITs' total returns, but only 33 percent of discretion REITs'. Partly due to REITs switching from formula-based to discretion-based compensation, the number of discretion REITs has grown while the number of formula REITs has declined. Average formula REIT return performance is inferior and switches tend to follow a period of poor financial performance; performance improves after such changeovers.
- DOI
- 10.1016/0165-4101(94)90009-4
- Volume
- 17
- Issue
- 1-2
- Pages
- 177-205
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref