REIT dividend payout: evidence from the Asia market

Abstract

Previous studies of real estate investment trust (REIT) dividend policies have focused primarily on REITs listed in the USA. These studies found that REITs in the USA usually distribute dividends not bounded by the tax regulation requirement. The dividend distribution by REIT is negatively related to firm performance including return on assets and growth in earnings. Furthermore, the managers tend to take advantage of the weak monitoring by paying lower dividends. This study focusses on the new emerging REIT market to examine the determinants of REIT dividend payout (selected from five countries or regions in Asia). The preliminary findings demonstrate that the dividend payout level for these REITs is negatively associated with returns on assets which support the agency cost theory. The results also show that the dividend payout level is negatively correlated with board size, which indicates that REITs pay low dividends with weak internal governance monitoring. The effective servicing of these emerging markets may help to ensure quality practices and accountability in these rapidly developing markets.