Real Estate Prices and Corporate Investment: Theory and Evidence of Heterogeneous Effects across Firms

Fougère, Denis; Lecat, Rémy; Ray, Simon

doi:10.1111/jmcb.12631

Cited by 12 publications

(3 citation statements)

References 30 publications

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“…7 As noted by Fougère et al (2017), there is evidence that, at the national level, prices in the different segments of the real estate market, and notably residential and corporate real estate, follow similar trends 8 Following this definition 73.4% of the relocations observed in our sample are local. There is of course a degree of arbitrariness in setting such a threshold.…”

Section: Firms' Mobility In Francementioning

confidence: 57%

Adjustment Costs and Factor Demand: New Evidence from Firms’ Real Estate

Bergeaud

Ray

2020

The Economic Journal

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We study corporate real estate frictions and its effect on firm dynamics and labour demand. We build and simulate a general equilibrium model with heterogeneous firms that predicts the response of firms to a productivity shock in the presence of fixed adjustment costs on real-estate. Using a large firm-level database merged with local real estate prices, we then exploit variations in the tax on capital gain to document a causal effect of adjustment costs on firms’ labour demand and derive new results on the causes and implications of firms’ local relocation.

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Section: Firms' Mobility In Francementioning

confidence: 57%

Adjustment Costs and Factor Demand: New Evidence from Firms’ Real Estate

Bergeaud

Ray

2020

The Economic Journal

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“…borrowers (FOUGÈRE et al 2017). The degree to which borrowing can increase based on collateral pledging depends on the liquidation value of the collateral in question.…”

Section: Capital Structure Theories and Real Estate Sectorsmentioning

confidence: 99%

The Determinants of Capital Structure: Evidence from GCC and UK Real Estate Sectors

Yousef

2019

Real Estate Management and Valuation

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This paper investigates the determinants of capital structure in the context of the Gulf Cooperation Council (GCC) and United Kingdom (UK) real estate sectors. The results of a bivariate analysis indicate that leverage in the UK is much higher than in GCC countries. This may be attributable to UK companies facing a lower cost of debt, which would facilitate their raising of debt capital from the market. In addition, UK real estate firms tend to be larger and have higher levels of tangibility and retained earnings compared with GCC firms, while GCC firms tend to be more profitable and have more growth opportunities. The results of panel and Tobit regression analyses support both trade-off and pecking order theories; for instance, company size was found to have a significant positive impact on different types of debt measurements (market and book debt ratios), which is consistent with the trade-off theory, while profitability and retained earnings to total assets exhibited a significant negative impact for GCC and UK real estate firms, which is consistent with the pecking order theory. Importantly, these results hold true regardless of whether the regressions are estimated using an OLS, random effects, fixed effects panel estimation or a Tobit model.

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“…Corporate real estate dynamics are important for at least three reasons. First, real estate is an important asset class for firms and serves multiple functions either as a productive asset or as a collateral for raising external finance (Chaney et al, 2012;Fougère et al, 2019). It is also an important source of friction that limits capital adjustments and employment dynamics of firms (Bergeaud and Ray, 2021).…”

Section: Introductionmentioning

confidence: 99%