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How do Personal Real Estate Transactions Affect Productivity and Risk Taking? Evidence from Professional Asset Managers

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  • David C. Ling
  • Yan Lu
  • Sugata Ray

Abstract

We examine the personal real estate transactions of professional asset managers to understand the effect of these transactions on professional productivity and risk proclivities. We find that real estate acquisitions lead to distractions, as evidenced by reduced performance, less active trading, and increased susceptibility to behavioral biases such as the disposition effect. We also find evidence that managers tend to increase the riskiness of their professional portfolios after real estate purchases, especially when purchasing investment properties and when purchases use extensive leverage. This suggests consistent risk‐taking appetites across personal and professional portfolios.

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  • David C. Ling & Yan Lu & Sugata Ray, 2021. "How do Personal Real Estate Transactions Affect Productivity and Risk Taking? Evidence from Professional Asset Managers," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S1), pages 7-40, March.
    • Handle: RePEc:bla:reesec:v:49:y:2021:i:s1:p:7-40
    DOI: 10.1111/1540-6229.12284
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    Cited by:

    1. Daniel Broxterman & Tingyu Zhou, 2023. "Information Frictions in Real Estate Markets: Recent Evidence and Issues," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 203-298, February.

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