Corporate governance and decision-making in real estate investment trusts

Corporate governance helps to limit problems arising from the separation of ownership and management interests. The principal-agent problem occurs when managers act in their benefit at the expense of shareholders. This paper aims to identify the critical elements of corporate governance, investment decision-making by Real Estate Investment Trusts (REITs). The findings will contribute to the development of a corporate governance scoring framework based on an analysis drawn from the United Kingdom, South Africa and Nigeria REITs.

REITs offer a unique setting to investigate the effect corporate governance has on a firm's performance by tackling corporate governance problems. Corporate governance and REITs research has received notable coverage; mostly in the United States with limited research directed at other REITs regimes (United Kingdom, South Africa and Nigeria). Additionally, researchers have largely ignored the investment decision-making processes undertaken by REITs and the effect this has on performance; as not all decisions are rational.

The framework will be further developed using detailed case studies and secondary sources of data, and a proposed self-scoring measurement of the quality of corporate governance and investment decision-making for REITs.