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Return enhancing, cash-rich or simply empire-building? An empirical investigation of corporate real estate holdings

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  • Du, Julan
  • Leung, Charles Ka Yui
  • Chu, Derek

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.

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  • Du, Julan & Leung, Charles Ka Yui & Chu, Derek, 2013. "Return enhancing, cash-rich or simply empire-building? An empirical investigation of corporate real estate holdings," MPRA Paper 44253, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:44253
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    1. Dong Chen & Yanmin Gao & Mayank Kaul & Charles Ka Yui Leung & Desmond Tsang, 2016. "The Role of Sponsors and External Management on the Capital Structure of Asian-Pacific REITs: The Case of Australia, Japan, and Singapore," International Real Estate Review, Asian Real Estate Society, vol. 19(2), pages 197-221.

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    Keywords

    corporate real estate; empire-building; corporate governance; financial constraint;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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