Management Changes And Performance: The Case Of REITs

Abstract

Managements (board of directors or executive officers) contribution to a firm is difficult to directly observe, although stock return performance can be a source of information. This study extends the work of McIntosh et al (1994) and Friday et al (2006) by analyzing management changes involving Real Estate Investment Trusts from 1996 to 2008. I find that there is a significant relationship between negative performance and a management change from a period three months prior to the change in management. REITs specializing in office properties have the largest negative performance prior to management changes. Negative performance prior to management changes was highest during the tech bubble period.