Real Asset Ownership and the Risk and Return to Stockholders

Many corporations own a significant amount of real assets and this includes real estate. However, the effect of real asset ownership on the risk and return for a firm’s stockholders is unknown. This study attempts to ascertain the effect, if any, of corporate real asset ownership on the risk and return to stockholders. Using data from 1985 through 1994, the results indicate a lack of diversification benefits associated with holding real assets.