Governance of Shareholder Expropriation for REITs under Shareholders’ Investor–Operator Dual Roles

Abstract Real estate investment trusts (REITs) can effectively alleviate the challenges of infrastructure financing given their capacity to serve the real economy with the capital market. However, an overly concentrated investor structure in REITs may lead to the risk of shareholder expropriation, which is detrimental to their sustainable development. Prior studies have overlooked the significant influence of the information advantage under shareholders’ investor–operator dual roles on the expropriation behavior, and have neglected to examine the effect of role conflict on shareholder expropriation. Therefore, this paper studies the expropriation governance of dual-role shareholders in REITs. A tripartite evolutionary game model involving dual-role investors, pure investors, and regulators is constructed. The impact of overlapping roles in expropriation strategy is then revealed, and the interactions between governance mechanisms and expropriation strategy are identified. The results showed that (1) the overlapping of the investor role and the operator role has an inhibitory effect on shareholder expropriation behavior, and moreover, the greater the degree of overlap, the more rapidly dual-role investors converge toward the nonexpropriation strategy; (2) the larger the shareholding proportion of dual-role investors, the more closely they are tied to the interests of REITs; furthermore, the appropriate private benefits of control can effectively incentivize dual-role investors to converge to the nonexpropriation strategy; and (3) regulators play a dominant role in the governance of shareholder expropriation in REITs. The systematicity of and synergy between governance tools can rapidly amplify governance effectiveness. Finally, some practical suggestions are proposed. Regarding the body of knowledge, this study addresses a critical gap in the literature on opportunism governance of dual-role subjects and sheds new light on promoting the healthy development of infrastructure financing.