Professional ethics and governance: understanding appraiser independence

Abstract

As no clear definition of appraiser independence exists in the literature to date, this paper proposes one, while also aiming to identify the key factors that influence this concept, contributing to the development of an independence framework. Drawing on behavioural corporate governance and business ethics theories, we focus on the relationship between fund managers and appraisers in the Portuguese real estate investment fund industry to assess how different agents perceive appraiser independence. Conflicts of interest, appraisers' economic dependence on the client and appraisers' experience are found to be the factors that most impact the perception of independence. Enforcement mechanisms (to guarantee effective corporate governance) are also considered important for ensuring independence. We also conclude that appraiser independence is perceived in the same way by different agents (appraisers vs non-appraisers).