How Do Personal Real Estate Transactions Affect Productivity and Risk Taking? Evidence From Professional Asset Managers

42 Pages Posted: 19 Mar 2018

See all articles by David C. Ling

David C. Ling

University of Florida - Hough Graduate School of Business Administration

Yan Lu

University of Central Florida - College of Business Administration

Sugata Ray

University of Alabama - Department of Economics, Finance and Legal Studies

Date Written: January 2018

Abstract

Housing decisions require intensive attention from households. However, the existing housing literature has not examined the potential connection between costly and time-consuming real estate purchases and the behavior and work productivity of individuals involved in the housing search and acquisition process. In addition, micro evidence on the link between home purchase decisions and the investment/risk choices of households is limited and inconclusive. Our study fills these gaps in the literature by examining the real estate acquisitions of professional asset managers. Overall, we find evidence that major purchases, such as 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. This increase in risk is concentrated in cases of purchases of investment properties and purchases using extensive leverage, suggesting consistent risk-taking appetites across personal and professional portfolios. These findings suggest that housing transactions may shed light on the decision making, risk taking, and work productivity of a broad set of homeowners, such as asset managers, corporate executives, and even rank and file employees.

Keywords: Asset Managers, Personal Real Estate

JEL Classification: G2, G4, R2

Suggested Citation

Ling, David C. and Lu, Yan and Ray, Sugata, How Do Personal Real Estate Transactions Affect Productivity and Risk Taking? Evidence From Professional Asset Managers (January 2018). Available at SSRN: https://ssrn.com/abstract=3143081 or http://dx.doi.org/10.2139/ssrn.3143081

David C. Ling (Contact Author)

University of Florida - Hough Graduate School of Business Administration ( email )

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States
(352) 392-0153 (Phone)
(352) 392-0301 (Fax)

Yan Lu

University of Central Florida - College of Business Administration ( email )

PO Box 161400
Orlando, FL 32816
United States

Sugata Ray

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
84
Abstract Views
1,001
rank
410,920
PlumX Metrics