NDLI: Green Building, Cost of Equity Capital and Corporate Governance: Evidence from US Real Estate Investment Trusts

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Green Building, Cost of Equity Capital and Corporate Governance: Evidence from US Real Estate Investment Trusts

Content Provider	MDPI
Author	Hsieh, Hui-Ching Claresta, Viona Bui, Thi
Copyright Year	2020
Description	Distinct from the existing literature, which mainly focuses on the impacts of green building practices on the owners’ benefits, this paper examines capital market participants’ perceptions of green building, specifically, the cost of equity capital. The study uses data regarding the United States Real Estate Investment Trusts (US REITs) from 2000 to 2016, employing a panel regression analysis and adopting a Price Earnings Growth (PEG) ratio model for the cost of equity capital estimation. We find a negative relationship between green building certification and the cost of equity capital. Our results encourage REITs to participate in green building certification and aim for higher green building rankings. In addition, we examine whether corporate governance could affect the intensity of green building practices in REITs. It is found that corporate governance practices implemented to align shareholders’ and managers’ interests, such as higher institutional holdings and a less dispersed ownership structure, positively impact firms’ resource allocation for green initiatives. The results suggest there could be mutual benefits for both economic profits and sustainable buildings.
Starting Page	3680
e-ISSN	20711050
DOI	10.3390/su12093680
Journal	Sustainability
Issue Number	9
Volume Number	12
Language	English
Publisher	MDPI
Publisher Date	2020-05-02
Access Restriction	Open
Subject Keyword	Sustainability Applied Ethics Social Responsibility Green Building Cost of Equity Capital Corporate Governance Ownership Structure
Content Type	Text
Resource Type	Article

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