Corporate Real Estate Holding and Stock Returns : Testing Alternative Theories with International Listed Firms

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Original languageEnglish
Pages (from-to)74–102
Journal / PublicationJournal of Real Estate Finance and Economics
Issue number1
Online published29 Nov 2022
Publication statusPublished - Jan 2024


This study examines the relationship between corporate real estate (CRE) holdings and stock returns before and after the Global Financial Crisis (GFC). We find that (1) the United States and the United Kingdom show a negative relationship before the GFC and positive after the GFC. (2) Firms that pay positive tax or have positive R&D investments are not systematically different from the full sample. This finding cannot support the "scarce capital" theory or the tax incentive explanation, but it is consistent with the “empire building” theory. After the GFC, financial constraints tightened, and both CRE holding and stock returns dropped. (3) European (excluding the United Kingdom) sample shows a positive relationship in the pre-crisis period. This finding is compatible with the "illiquidity premium" theory. However, the association becomes inconclusive in the post-crisis period. (3) The Japanese sample shows a negative association between CRE and stock returns in the pre-crisis period, like the United States and the United Kingdom. However, the relationship becomes statistically insignificant in the post-crisis period, consistent with the theory of financial constraint tightening after the GFC. © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2022

Research Area(s)

  • Global Financial Crisis, corporate real estate holding, collateral constraint, illiquidity premium