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Abstract

The real estate investment trust (REIT) companies’ environment is interesting for testing direct compensation issues, because of their unique regulated characteristics. The agency theory posits that boards of directors should monitor managers’ activities for the firms’ stockholders. However, at the turn of century firm failures and the market crash in 2008 have led to increased stockholder activism and the passing of Sarbanes–Oxley in 2002 and Dodd-Frank in 2010. These generally applied regulations have increased the pressure on boards to be more effective agents for stockholders. Director compensation is an important issue and our paper will empirically investigate these issues on the REIT industry around the 2008 market crash.

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