The Journal of Real Estate Finance and Economics

, Volume 42, Issue 4, pp 451-480

First online:

Corporate Governance and Performance in the Market for Corporate Control: The Case of REITs

  • Robert D. CampbellAffiliated withDepartment of Finance, 134 Hofstra University
  • , Chinmoy GhoshAffiliated withDepartment of Finance, University of Connecticut
  • , Milena PetrovaAffiliated withDepartment of Finance, Whitman School of Management, Syracuse University Email author 
  • , C. F. SirmansAffiliated withDepartment of Risk Management/Insurance, Real Estate and Business Law, Florida State University

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We examine 132 mergers and acquisitions by Real Estate Investment Trusts (REITs) during 1997–2006 and explore the relationship between acquirer external and internal corporate governance mechanisms and announcement abnormal returns. We argue that in regulated industries with absent active takeover market, the importance of outside governance mechanisms is diminished and substituted by internal governance controls. We focus on the REIT industry. We find that bidder returns are higher for REITs with smaller boards, with more experienced CEOs, but with shorter tenure. Acquirers’ announcement returns are also significantly and positively related to higher ownership by their CEOs and board directors. We find no significant relationship between presence of staggered board and abnormal bidder returns, which supports our hypothesis that anti-takeover defense measures have reduced importance for REITs.


Corporate governance Mergers Corporate control Real Estate Investment Trusts