Corporate Governance and Capital Structure Decisions of UK Listed Real Estate Companies

Abstract

This paper examines how the capital structure decisions of UK listed real estate companies are influenced by some key corporate governance indicators. Using panel data methodology, it is documented that real estate companies with larger board sizes and greater CEO remunerations employ less leverage. There is also weak evidence showing a negative relationship between the proportion of outside directors and the level of leverage used. Additionally, there is evidence to show that there is generally no difference between REITs and Non-REITs regarding their respective leverage levels. This indicates that UK REITs may be highly geared contrary to expectations of lower debt levels. Overall, the results are relevant as they demonstrate that corporate governance impacts crucial corporate policy decisions such as those relating to capital structure even for such a unique industry as real estate.

Keywords: Corporate Governance, Capital Structure, Real Estate Companies, UK