Principal-agent issues in asset acquisition: UK institutions and their investment agents

This paper explores principal‐agent issues in the stock selection processes of institutional property investors. Drawing upon an interview survey of fund managers and acquisition professionals, it focuses on the relationships between principals and external agents as they engage in property transactions. The research investigated the extent to which the presence of outcome‐based remuneration structures could lead to biased advice, overbidding and/or poor asset selection. It is concluded that institutional property buyers are aware of incentives for opportunistic behaviour by external agents, often have sufficient expertise to robustly evaluate agents’ advice and that these incentives are counter‐balanced by a number of important controls on potential opportunistic behaviour. There are strong counter‐incentives in the need for the agents to establish personal relationships and trust between themselves and institutional buyers, to generate repeat and related business and to preserve or generate a good reputation in the market.

Professionalism and professional institutions in times of change

Professionalism and professional institutions have developed and changed very gradually in recent decades, such that there are conflicting and competing definitions of what it means to be a professional. The direction of travel is examined through an institutional lens in terms of current trends and practices that have transformed professional life. At first sight, the evolution of professionalism appears to be developing into a new professionalism that requires less of professional institutions and more of the institutions of societal governance, such as contracts and statutes. These transformations are explored with reference to the need for a sustainable urban environment, showing that despite a reduced role of professional institutions, certain aspects of professionalism remain crucially important, especially in those jurisdictions where societal governance is not well developed. With the growing sophistication of legislation, insurance and commerce, the emphasis of what it means to be a professional is evolving. One key aspect of professionalism that is not usually listed in most texts is role definition and how this provides a sense of identity. Professionalism remains a relevant and important concept, but the exigencies of a sustainable urban environment transcend the objectives of the professions and demand a broader, collaborative and participative agenda.

Contested institutions? Traditional leaders and land access and control in communal areas of Eastern Cape Province, South Africa

The South African government has endeavoured to strengthen property rights in communal areas and develop civil society institutions for community-led development and natural resource management. However, the effectiveness of this remains unclear as the emergence and operation of civil society institutions in these areas is potentially constrained by the persistence of traditional authorities. Focusing on the former Transkei region of Eastern Cape Province, three case study communities are used examine the extent to which local institutions overlap in issues of land access and control. Within these communities, traditional leaders (chiefs and headmen) continue to exercise complete and sole authority over land allocation and use this to entrench their own positions. However, in the absence of effective state support, traditional authorities have only limited power over how land is used and in enforcing land rights, particularly over communal resources such as rangeland. This diminishes their local legitimacy and encourages some groups to contest their authority by cutting fences, ignoring collective grazing decisions and refusing to pay ‘fees’ levied on them. They are encouraged in such activities by the presence of democratically elected local civil society institutions such as ward councillors and farmers’ organisations, which have broad appeal and are increasingly responsible for much of the agrarian development that takes place, despite having no direct mandate over land. Where it occurs at all, interaction between these different institutions is generally restricted to approval being required from traditional leaders for land allocated to development projects. On this basis it is argued that a more radical approach to land reform in communal areas is required, which transfers all powers over land to elected and accountable local institutions and integrates land allocation, land management and agrarian development more effectively.