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Enduring Crises: The Link Between Corporate Real Estate and Economic Policy Uncertainty

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  • Alistair Drew Ingham

    (National University of Singapore)

Abstract

This article examines the relationship between corporate real estate (CRE) and economic policy uncertainty (EPU), and how this relationship may aid companies in their decision-making, which form the impetus for this research. Multiple linear regressions are conducted to analyse corporate-level financial performance, using return on assets and market price as indicators, with regard to macroeconomic indicators such as gross domestic product (GDP) growth, inflation, and EPU. A vector error correction model is also used to ascertain the short- and long-term dynamics at play. The results reveal a statistically significant impact by both CRE and EPU on financial performance, as well as a significant interaction between the two variables. This novel estimate affirms that there is indeed a link between CRE held and financial performance during times of economic uncertainty. This article also establishes a link between CRE ownership and company sector, and explores the relationship between the maturity and ownership concentration of companies, with reference to the CRE held, thus providing the basis to show the different decision-making processes of companies at different stages of their lifecycle, and in different sectors.

Suggested Citation

  • Alistair Drew Ingham, 2022. "Enduring Crises: The Link Between Corporate Real Estate and Economic Policy Uncertainty," International Real Estate Review, Global Social Science Institute, vol. 25(3), pages 371-399.
    • Handle: RePEc:ire:issued:v:25:n:03:2022:p:371-399
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    References listed on IDEAS

    as
    1. Hassett, Kevin A & Metcalf, Gilbert E, 1999. "Investment with Uncertain Tax Policy: Does Random Tax Policy Discourage Investment?," Economic Journal, Royal Economic Society, vol. 109(457), pages 372-393, July.
    2. Thomas Chaney & David Sraer & David Thesmar, 2012. "The Collateral Channel: How Real Estate Shocks Affect Corporate Investment," American Economic Review, American Economic Association, vol. 102(6), pages 2381-2409, October.
    3. Ben S. Bernanke, 1983. "Irreversibility, Uncertainty, and Cyclical Investment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(1), pages 85-106.
    4. repec:hal:spmain:info:hdl:2441/75koqefued8i7pihbrl9u84p4u is not listed on IDEAS
    5. Kevin A. Hassett, 1999. "Tax Policy and Investment," Books, American Enterprise Institute, number 53049, September.
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