Corporate Governance and Market Valuation of Publicly Traded Real Estate Companies: Evidence from Europe

Nicolas Kohl and Wolfgang Schaefers

Online First™, 1 February 2010

Abstract

With respect to the increasing significance of transparency and corporate governance, the study at hand investigates the impact of a broad set of principal corporate governance mechanisms on the market valuation of publicly traded real estate companies from the UK, France, the Netherlands and Germany, while addressing major econometric shortcomings of previous corporate governance studies, including omitted variable bias, endogeneity and reverse causality. The results of the analysis have important practical implications for strategic decision-making of both top-executives of publicly traded real estate companies as well as investors.Keywords  Corporate governance – Agency theory – Real estate capital markets – Firm valuation – Endogeneity – Three-stage least squares (3SLS)

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