The Effect of Real Estate Prices on Peer Firms

Einar Cathrinus Kjenstad, Anil Kumar*

*Corresponding author for this work

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review


We investigate peer effects from corporate real estate. Shocks to real estate prices shift firms' debt capacity, which has a significant impact not only on firm investment but also on the investment of peer firms. This peer effect from corporate real estate is stronger when firms or their peers have more investment opportunities; financially constrained firms invest more out of their own price shocks, while the peer effect is stronger for unconstrained firms; and we find significant peer effects within groups of small and large firms, respectively. Firms finance additional investment from peer real estate shocks using cash reserves. Overall, we document a new channel through which real estate is an economically significant determinant of corporate investment.

Original languageEnglish
JournalReal Estate Economics
Pages (from-to)1022-1053
Number of pages32
Publication statusPublished - 2022


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