| Article ID: | iaor2016922 |
| Volume: | 39 |
| Issue: | 1 |
| Start Page Number: | 87 |
| End Page Number: | 114 |
| Publication Date: | Mar 2016 |
| Journal: | Journal of Financial Research |
| Authors: | Cashman George D, Harrison David M, Panasian Christine A |
| Keywords: | investment, management, statistics: empirical |
Using a sample of 195 unique real estate investment trusts (REITs), we examine factors related to the adoption of clawback provisions within managerial compensation contracts. In general, we find strong and consistent empirical evidence that clawback provision are directly related to firm size, complexity, leverage, growth options, monitoring incentives, and CEO performance incentives. We also find that clawbacks are associated with enhanced market and accounting performance, with stronger performance relations observed for adoption decisions tied directly to regulatory mandates. In sum, we conclude compensation clawback provisions represent a value‐relevant, strategic governance mechanism for REITs.