Corporate Governance in the German Real Estate Industry
||Corporate Governance in the German Real Estate Industry
||10th European Real Estate Society Conference (10-13 June 2003) Helsinki, Finland
||Corporate governance is becoming an important issue in the German real estate industry. Some of the major issues facing German real estate companies today as they try to gain and maintain investorís confidence are for example: standardized property valuation, transparency, executive compensation, board member qualification and board appraisal, investorís relations and corporate rating. The purpose of the paper is to describe the status quo of corporate governance in German real estate companies as well as trends and recent developments and changes. Despite the differences in corporate control structure, Germany has made substantial progress over the past years in increasing transparency, independence and professionalism in most German boards. The German Corporate Governance Code has put many different laws in one framework and made Germanyís corporate governance rules transparent for both national and international investors. Being member of a supervisory board is no more regarded as a purely honorary function, with little time involvement, low pay and virtually no liability, but as a professional task. Board members have increased the time they commit to their role and are now very concerned about liability. Germany is following the international trend for convergence in practice and content. It is trying to adopt best practice from other countries, as long as it does not clash with the German legal structure. While many of the worldís largest publicly listed companies have understood that transparency and investorís relations are important, this lesson has not yet been learned by the majority of German real estate companies. Focusing on standardized appraisal methods, good investorís relations, qualified managers and transparency will be on the agenda for the next years. The foundation of the Initiative Corporate Governance of the German Real Estate industry will speed up the development of good governance throughout the industry and set quality standards.
||German real estate industry; corporate governance; executive compensation; transparency; principal-agent theory; board appraisal; valuation; capital raising; rating
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||Session 2, Management Issues in the Real Estate Industry
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