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Role of Focus and Managerial Ownership in Financial Performance of REITs: An Empirical Examination
Abstract
In this research, we examine the effect of focus and managerial ownership on the financial performance of REITs. Results demonstrate a positive relationship between focus and financial performance in this sector that are consistent with the findings in current literature. Impact of managerial ownership, however, seems weak on REITs performance. Our findings provide direct support for the convergence-of-interests hypothesis. We also examine the curvilinear relationship between firm performance and managerial ownership already documented in the literature. Our results show that this relation is not supported in the REITs sector. Our results do not support the entrenchment hypothesis. In addition, when agency conflicts drive the increase in focus strategy is investigated, we find that the agency conflict explanation for increase in focus strategy is warranted.