The Journal of Real Estate Finance and Economics

, Volume 35, Issue 4, pp 385–410

CEO Involvement in Director Selection: Implications for REIT Dividend Policy

Article

Abstract

This paper examines the relationship between CEO entrenchment and dividend policy of real estate investment trusts (REITs). We develop an index for CEO entrenchment using CEO tenure and duality and find that this index has significant impact on dividend policy. We further separate our sample into two sub-groups: REITs with and without nomination committees. Our analyses show a strong positive relationship between CEO entrenchment level and dividend payout for REITs without a nomination committee. In REITs with nomination committees, CEO entrenchment has less influence on dividend policy. We conclude that dividend policy serves as a substitution for other governance mechanisms. Further, our results are consistent with the evidence for other US firms—CEO that are more entrenched pay higher dividends to avoid shareholder sanctions and the threat of takeover.

Keywords

CEO involvement Director selection Nomination committee Dividend policy 

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.School of ManagementUnion Graduate CollegeSchenectadyUSA
  2. 2.Center for Real Estate and Urban Economic Studies, School of BusinessUniversity of ConnecticutStorrsUSA

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