A Research On Governance Structure And Performance Of REITS

In2005, China released the first simi-REITs products-the NO.9of "Lianxin. Libao ", which marked that China began to explore the road of developing REITs actively. In the process of developing local REITs in china, adopting appropriate governance structure is the most important part. Because reasonable governance structure will motive fund managers to work hard for investors, contribute to reduce agency costs and protect investors’ interests. Whats’ more, with its special operating mechanism that connects to the real estate market and capital market, REITs are different from general industrial and commercial enterprises, and also different from ordinary mutual funds. So REITs has its own characteristics in the governance structure and obviously, it is necessary to do serious research on REITs governance structure.In this paper, there is a brief introduction of REITs at first. Then the paper takes a literature review of the theory of corporate governance and other related theories (including the principal-agent theory, modern housekeeper theory and stakeholder theory). Combining with these theories, the paper takes a simple cost-benefit analysis of REITs and elaborates the possible principal-agent problems to be faced in the designing of its governance structure. Next, the paper uses the sample of U.S. REITs and selects some relevant indicator variables to take empirical analysis which attempts to clarify the relationship between governance structure and fund’performance. And then, the paper draws some conclusions that how ownership structure, board size, board structure and senior managements’behaviors impact the performance of REITs. Finally, after analyzing the current situation of domestic REITs market and combining with the experience of the United States and empirical results, the paper makes policy recommendations regarding to how to improve fund performance by design governance structure.