Corporate governance and investment decision-making in real estate investment trusts (REITs)

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. Real Estate Investment Trusts (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. This paper aims to identify the critical elements of corporate governance, investment decision-making by 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. 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