Search

In this paper we analyze market segmentation by firm size in the commercial real estate transaction process. Using novel micro-level data, we look at the probability distribution of investors acquiring a specific bundle of real estate characteristics, distinguishing between investors based on the size of their real estate portfolio. We find evidence of market segmentation by investor size: institutional investors segment across property characteristics based on the size of their real estate portfolio. The probability that a large (small) seller will sell a property to a similar-sized buyer is higher, keeping all else equal. We explore potential drivers of this market segmentation and find that it is mainly driven by investor preferences. During the Global Financial Crisis (GFC), large investors were less likely to buy the ‘average’ property, as compared to the period before or after the crisis, indicating time-varying investor preferences.

Combining granular data on temperatures across the continental US with micro-level commercial real estate (CRE) data from 1991 to 2020, we study the impact of exposure to extreme temperature shocks on investment performance of CRE at the individual asset level. We find that exposure to extreme temperatures significantly reduces average realized total returns in CRE. This result is driven by reduction in asset returns. We do not observe a significant effect of income return. We document substantial variation in sensitivity to temperature shocks across property types. Our results seem to be driven by shocks to time-varying CRE risk premium due to decreased predictability of future rental income.

In firms with multiple blockholders governance via exit is affected by how blockholders react to each others' exit. Institutional investors, who hold the majority of equity blocks, are heterogeneous in their incentives. How do these incentives affect the manner in which institutional blockholders respond to each others' exit? We present a model that shows that open-ended institutional investors, who are subject to investor redemption risk, will be sensitive to an informed blockholder's exit, giving rise to correlated exits and strengthening governance. Thus, exposure to redemption risk, universally a negative force in asset pricing, plays a positive role in corporate governance. Using data on engagement campaigns by activist hedge funds we present large-sample evidence consistent with our theoretical mechanism.

We investigate whether business ties with portfolio firms influence mutual funds' proxy voting using a comprehensive data set spanning 2003 to 2011. In contrast to prior literature, we find that business ties significantly influence promanagement voting at the level of individual pairs of fund families and firms after controlling for Institutional Shareholder Services (ISS) recommendations and holdings. The association is significant only for shareholder-sponsored proposals and stronger for those that pass or fail by relatively narrow margins. Our findings are consistent with a demand-driven model of biased voting in which company managers use existing business ties with funds to influence how they vote. [ABSTRACT FROM AUTHOR]

In this paper I study the effect of changes in the value of parental housing wealth during children’s teenage years on the parental and children’s financial outcomes and consumption patterns later in life. Increases in the value of home equity when children are teenagers affect the parents’ ability to finance children’s further education as well as other expenditures. In particular, appreciating house prices increase the value of housing equity, which in turn can increase parental investment in their children’s education due to a “wealth” effect, or because the value of their collateral to be used for financing college debt has increased. By using parental and their children’s demographic and financial information from the Panel of Income Dynamics (PSID), I investigate how increases in the housing value just before children turn 18, affect their indebtedness levels later in life, their likelihood of purchasing a house and their predominant choice of financing house purchases, as well as their consumption choices. In particular, I study whether these intergenerational wealth transfers operate through relaxation of financing constraints (the collateral channel), or through increases in wealth (the wealth channel).

We investigate whether business ties with portfolio firms influence mutual funds' proxy voting using a comprehensive data set spanning 2003 to 2011. In contrast to prior literature, we find that business ties significantly influence pro-management voting at the level of individual pairs of fund families and firms after controlling for ISS recommendations and holdings. The association is significant only for shareholder-sponsored proposals and stronger for those that pass or fail by relatively narrow margins. Our findings are consistent with a demand-driven model of biased voting in which company managers use existing business ties with funds to influence how they vote.