Corporate governance and its effects on REIT credit ratings

In this paper we investigate whether REITs with strong corporate governance benefit from higher credit ratings relative to REITs wi th weak governance. We document that , after controlling for REIT - specific characteristics, the credit ratings are negatively associated with number of CEOs, CEO busyness and number of directors above 70 years old ; and positively related to expertise of the board and aggregated stock ownership of the board. We find that REITs with stronger corporate governance has higher probability of being in investment grade. We also find that the relationship between corporate governance and credit ratings are stronger among REITs with lower dividend yield