Return Enhancing, Cash-rich or simply Empire-Building? An Empirical Investigation of Corporate Real Estate Holdings

Abstract

No, we find no evidence for a return-enhancing role for corporate real estate holdings, which is consistent with the previous literature. Instead, our study based on a sample of U.S. listed corporations suggests that corporate real estate holdings are a form of managerial “empire building”. Corporations with weaker corporate governance and a lower degree of financial constraint tend to have higher real estate holdings, whereas higher real estate holdings are associated with lower returns to shareholders. The impact of corporate governance on corporate real estate holdings seems to be stronger in manufacturing-related industries. Implications and future research directions are discussed.
 

Download Entire Article

Keywords

Time-Varying Integration, Return and Volatility Causality, Multivariate Asymmetric DCC-GARCH, Return Convergence, Securitized Real Estate Markets, International Stock Markets

Back to Previous Page