Do Boards Shape REIT Performance? Evidence from the South African REIT Sector
Year: 2026
Type: article
Abstract: We examine whether board activity, board size, board independence, and board tenure are associated with the performance of South African REITs from 2013 to 2025. We assess whether these attributes translate into measurable performance differences. We use a dynamic panel framework based on the Arellano-Bond two-step Difference Generalised Method of Moments (GMM-Diff) estimator to address endogeneity, unobserved heterogeneity, and performance persistence. Windmeijer finite-sample corrected standard errors are applied. The sample covers 30 JSE-listed REITs and 360 firm-year observations. Performance is measured using funds from operations per share (FFO_PS), dividend yield (DIV_YIELD), return on assets (ROA), return on equity (ROE), return on invested capital (ROIC), and earnings per share (EPS). Our findings show that board independence is positively and significantly associated with FFO_PS. A 10% increase in independent directors raises FFO_PS by about 59 cents per share. Board size is positively associated with dividend yield, where an additional director adds 1.5% to yield. Board tenure is negatively associated with ROIC, with each additional year reducing ROIC by 0.9%. Board activity has no significant effect on any performance measure. The lagged dependent variable is significant in four of six models, confirming dynamic persistence. The implications are manifold; REIT boards should maintain a clear independent majority, with about 6 independent directors on a ten-member board, to support recurring operating cash flow. Boards of 9 to 12 directors deliver expertise required to sustain distributable income. Board should begin structured tenure review and planned succession once average service approaches 6 years. Meeting frequency alone is not a reliable governance metric. This study contributes sector-specific evidence on board structure in REITs using a dynamic methodology and links empirical findings directly to quantifiable governance benchmarks.
DOI: 10.3390/ijfs14080200
Institution: University of Johannesburg
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $2,172
OpenAlex ID: W7172350238