Abstract
In this paper, we study the impact of CEO and board gender diversity on the risk management decisions of 179 U.S. Real Estate Investment Trusts (REITs) during the 2001–2018 period. Using a bottom-up analysis on the properties in REIT portfolios, we find significant risk reduction associated with gender-diverse REIT leadership. We document that REITs with a woman CEO, in combination with more women on the board, display less active trading and a longer hold period for assets. In addition, REITs with more gender-diverse leadership are more geographically focused, which for REITs is considered a lower risk investment strategy. Finally, REITs with more gender-diverse leadership are more actively investing in environmentally sustainable real estate. We conclude that gender diversity in real estate firms carries real-life implications for U.S. cities, given their key role as developers, owners, and operators of the built world.
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Our research relies upon licensed data from several commercial real estate data vendors and thus cannot be provided publicly. Upon request, we will provide a description of how any intermediate data sets and programs were employed to create the final data set(s), if relevant. We will fully cooperate with investigators seeking to conduct a replication who request additional information.
Notes
For more details, please visit https://www.reitsacrossamerica.com/united-states.
Not all of the real estate industry follows this model: the National Association of Realtors lists that 65% of residential real estate agents in the U.S. are women, but again, in commercial real estate brokerage that proportion is just 37%. For details, see: https://www.nar.realtor/women-in-real-estate.
For more details, please visit https://www.iea.org/reports/buildings.
The industry experts include: John Worth at Nareit, the leading industry association for REITs; Jacques Gordon at LaSalle Investments, a global real estate investment management firm; and, Piet Eichholtz, professor at Maastricht university and founder of GPR, the first global property index provider.
On the contrary, for private equity real estate funds a geographic diversification strategy is more salient, as they are neither required to disclose their investment activities, nor are fund investments/divestments as easy to execute or calibrate on an ongoing basis.
We also tested the percent of the board comprised by women; the results were largely unaffected. Furthermore, the proportion measure does not capture the “presence” impact as well as number of women, and the Blau measure captures the essence of fractional gender distribution mainly considering density of men in the board.
For additional details, see www.usgbc.org/leed and www.energystar.gov
We only count the property as “green” for a given year if it was held in the portfolio over the entire year. For example, if a REIT acquired a LEED certified building in 2010 and sold it in 2012, it would be counted as “green” in 2011 only.
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Acknowledgements
The authors would like to thank three anonymous referees, Corinne Post (the Editor), and participants at the 2022 Homer Hoyt Institute and the Laval University Seminar Series for their helpful comments. John Worth, Jacques Gordon, and Piet Eichholtz provided useful industry insights, and Charlotte Saes provided inspiration for pursuit of this topic.
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Devine, A., Jolin, I., Kok, N. et al. How Gender Diversity Shapes Cities: Evidence from Risk Management Decisions in REITs. J Bus Ethics 189, 723–741 (2024). https://doi.org/10.1007/s10551-023-05563-1
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DOI: https://doi.org/10.1007/s10551-023-05563-1