The valuation effect and consequences of clawback adoption in real estate investment trusts

Clawback provisions are a value-relevant corporate governance mechanism even in the highly regulated REIT market, as investors positively value the adoption of strong policies, particularly in firms with higher prior financial restatement risk and disclosure opacity. Adopting such policies tangibly improves REIT governance by reducing the likelihood of financial restatements, enhancing the quality of financial disclosures, and curbing aggressive investment.