Article:

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

Author: Julan Du, Charles Ka Yui Leung, Derek Chu

Start Page: 301
End Page: 357
Volume: 17
Issue Number: 3
Year: 2014
Publication: International Real Estate Review

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.

Keywords

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

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