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Corporate Governance and Firm Performance : Evidence from Real Estate Investment Trusts
| Content Provider | Semantic Scholar |
|---|---|
| Copyright Year | 2012 |
| Abstract | This paper investigates the impacts of a firm’s sto ck liquidity on corporate governance and firm performance. Due to its unique corporate governance d regulatory features, the REIT industry provides a natural experiment to highlight the corp orate governance implications of stock liquidity. Using a sample of REITs in US from 1992 to 2008, we find that stock illiquidity, measured by Amihud illiquidity, effective spread, a nd percentage of zero volume days, has a significant negative impact on future firm performa nce. Such an impact is more economically significant for REITs with low institutional owners hip, with low dividends and with managerial entrenchment. Moreover, we find that stock liquidit y enhances different corporate governance mechanisms, including: (i) monitoring by long-term institutional investors; (ii) managerial incentives and efficiency of managerial compensatio ns; and (iii) turnovers of key governance committees that impact managerial compensation and monitoring activities. Overall, our findings support corporate governance implications of stock liquidity. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://www.um.edu.mo/fba/gcrec2012/83974183/12017%20-%20Cheung.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
