Corporate Governance and Its Impact on NAV Discounts in Real Estate Investment Trusts

The persistence of net asset value (NAV) discounts in Real Estate Investment Trusts (REITs) has long challenged conventional asset pricing theories, reflecting both fundamental and behavioral dynamics. This study develops a conceptual framework that positions corporate governance as a central determinant of NAV discounts, linking governance mechanisms to valuation efficiency. The framework emphasizes the role of board independence, shareholder rights, disclosure quality, and managerial accountability in shaping investor perceptions and mitigating agency conflicts. The problem addressed is the limited integration of governance factors into existing models that primarily rely on financial fundamentals, thereby overlooking the institutional and behavioral dimensions of valuation anomalies. Methodologically, the study employs an empirical analysis of listed REITs, utilizing governance indices, financial performance metrics, and NAV discount measures across different market contexts. The results indicate that stronger governance structures are associated with narrower NAV discounts, suggesting that transparent and accountable governance reduces information asymmetry and enhances investor confidence. Furthermore, findings reveal that governance effects are more pronounced during periods of heightened market volatility, underscoring its role as a stabilizing mechanism. The implications are twofold: theoretically, the research advances understanding of how governance interacts with market pricing in real estate securities; practically, it provides insights for investors, policymakers, and regulators seeking to align corporate governance reforms with market efficiency and stability. Keywords Corporate governance, real estate investment trusts (REITs), NAV discounts, market efficiency, board independence, shareholder rights, disclosure transparency, agency conflict, investor confidence, valuation anomalies.