Title

Clawback Provisions in Real Estate Investment Trusts

Document Type

Article

Language

eng

Publication Date

Spring 2016

Publisher

Wiley

Source Publication

Journal of Financial Research

Source ISSN

0270-2592

Abstract

Using a sample of 195 unique real estate investment trusts (REITs), we examine factors related to the adoption of clawback provisions within managerial compensation contracts. In general, we find strong and consistent empirical evidence that clawback provision are directly related to firm size, complexity, leverage, growth options, monitoring incentives, and CEO performance incentives. We also find that clawbacks are associated with enhanced market and accounting performance, with stronger performance relations observed for adoption decisions tied directly to regulatory mandates. In sum, we conclude compensation clawback provisions represent a value-relevant, strategic governance mechanism for REITs.

Comments

Journal of Financial Research, Vol. 39, No. 1 (Spring 2016)L 87-114. DOI. © 2016 John Wiley & Sons, Inc.

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