Fee Structure, Financing, and Investment Decisions: The Case of REITs

We propose a model to show how the fee structure of listed Real Estate Investment Trusts (REITs) can increase instead of decrease Management Company opportunistic behaviors. Distinguishing between performance fees paid on the fund market value and management fees paid either on the Net Asset Value (NAV) or on the Gross Asset Value (GAV), we show that only the former aligns the Management Company and shareholder interests. In particular, we demonstrate that management fees lead Management Companies to make suboptimal financing and investment decisions in order to maximize their own wealth at the expense of shareholders. We test the predictions of the model empirically using a panel of Italian listed REITs.Real Estate Investment Trusts, Fees, Debt, Investment

INFORMATIVA SOCIETARIA E INTERNAL DEALING: UNA VERIFICA EMPIRICA SUL MERCATO ITALIANO

2003/2004XVII Ciclo1977Versione digitalizzata della tesi di dottorato cartacea

Comparing SRI funds to conventional funds using a PCA methodology

In this paper, we investigate characteristic differences between Socially Responsible Investment (SRI) funds and conventional funds across 35 different categories, including previously unexplored areas, such as fund manager skills and investment strategies. Further, we examine SRI and conventional funds globally rather than from just one country (e.g., US) or one region (e.g., Europe), covering funds listed in 22 different countries. We also adopt a new Principal Component Analysis (PCA) methodology for matching SRI funds against their conventional counterparts that significantly increases the sample size from previous studies, reducing selection bias and possibly explaining contradictory findings in the prior literature. Contributing to the literature, our findings show that: (i) SRI funds have more diversified portfolios than conventional funds; (ii) SRI funds have lower cash holdings while investing more in US equities; and (iii) SRI fund managers charge a smaller fee and are more successful in managing their portfolios. This is reassuring for investors who invest in SRI funds and for the future health and sustainability of the planet

Economic Sustainability, Innovation, and the ESG Factors: An Empirical Investigation

open3noThe growing attention to sustainability has generated increasing interest in its relevant determi-nants and a possible relationship with economic growth's main drivers. Our paper contributes - in three ways - to this literature by proposing an empirical analysis of most innovative companies listed worldwide (909 firms over the 2013-17 time-span): firstly, market-perceived innovation - proxied by the interaction between R&D intensity and the market-to-book ratio - has a positive impact on economic sustainability; secondly, when the three ESG pillars are considered, the social one turns out to have the highest effect on economic sustainability; thirdly, results are confirmed even when we control for context-specific conditions.openLuca Di Simone, Barbara Petracci, Maria Cristina PivaLuca Di Simone, Barbara Petracci, Maria Cristina Piv

Corporate social responsibility and cost of financing- The importance of the international corporate governance system

Research Question/Issue Our study examines whether international corporate governance systems shape the relationship between a firm's engagement in corporate social responsibility (CSR) and their cost of financing (both equity and debt). Research Findings/Insights Using a large international sample, our findings reveal that although the link between CSR performance and the cost of equity is negative in a shareholder-oriented system, this relationship is positive in a stakeholder-oriented system. Furthermore, the link between CSR performance and the cost of debt is negative for firms that are close to default in both systems. Theoretical/Academic Implications Our study highlights the importance of considering the shareholder/stakeholder orientation at the country level to explain the link between CSR performance and the cost of financing. Our findings help to explain and place into context the previous mixed findings on the relationship between CSR and the cost of equity and debt and add to the debate about whether CSR is beneficial or detrimental to corporate governance. Practitioner/Policy Implications The analysis of how the country corporate governance system influences the effect of CSR performance on the cost of financing allows for a deeper understanding of how investors respond to CSR initiatives worldwide and offers managers, directors, and policy makers context-specific recommendations. Our analysis also highlights the limitations of transferring insights regarding CSR from one corporate governance system to another.The authors acknowledge support from the Projects FEDER UNC315-EE-3636, 2018-00117-001, 2016-00454-001, and 2016-00463-001 financed by the Spanish Ministry of Economy