Abstract
Executive Summary. The Asian real estate investmenttrust (REIT) markets have recently experienced an explosivegrowth. However, studies on their corporate governancehave been limited. This paper aims to fill the gapby testing the effects of board independence and shareownershipstructure on the performance of sample AsianREITs. Using dynamic panel regressions with instrumentalvariables on sample REITs in five Asian markets,the relationship between insider shareholdings andboard independence is found to be non-linear. Insiderswith large shareholding interests do not entrench theircontrols by selecting fewer and friendly independent directorsonto the boards. Consistent with the hypothesisof Morck, Shleifer, and Vishny (1989), large shareholdingsby insiders (sponsors) are viewed as a signal of interestalignment with small shareholders. Asian REITswith large controlling insiders outperform other REITsthat are not backed by strong insiders' shareholdings.
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