CORPORATE GOVERNANCE OF ASIAN REITS: INTRODUCING A NEW FRAMEWORK OF ANALYSIS

As the REIT regime has been expanding globally over the last ten years, corporate governance practices in emerging REIT markets have become a major concern for domestic and international investors alike. Idiosyncrasies stemming from the ownership models applied in Asian economies and the fact Asian REITs are often externally managed ícaptive entitiesî make issues pertaining to corporate governance of the listed real estate sector in Asia all the more important. To address these issues, the paper introduces an original framework that can be used to estimate the level of corporate governance among externally managed Asian REITs. As a pilot study, the framework is applied to define a corporate governance index of REITs listed on the Singapore Stock Exchange (S-REITs). The index called R-Index enables the ranking of S-REITsícorporate governance practices. It is then used to examine the relationship between corporate governance and performance of S-REITs. The empirical tests based on several performance-related metrics provide evidence supporting a positive correlation between corporate governance practices identified in the R-Index and performances. In other words, S-REITs with higher corporate governance tend to register better corporate performance on risk-adjusted basis.