The Effect of Real Estate Prices on Peer Firms

48 Pages Posted: 1 Jun 2020 Last revised: 14 Sep 2021

See all articles by Einar C. Kjenstad

Einar C. Kjenstad

Aarhus University; Danish Finance Institute

Anil Kumar

Aarhus University, Department of Economics & Business Economics; Danish Finance Institute

Date Written: September 14, 2021


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.

Keywords: Real estate, collateral, peer effects, corporate investment, financial flexibility

Suggested Citation

Kjenstad, Einar C. and Kumar, Anil, The Effect of Real Estate Prices on Peer Firms (September 14, 2021). Proceedings of Paris December 2020 Finance Meeting EUROFIDAI - ESSEC, Available at SSRN: or

Einar C. Kjenstad (Contact Author)

Aarhus University ( email )

Nordre Ringgade 1
Aarhus, 8000


Danish Finance Institute ( email )

Anil Kumar

Aarhus University, Department of Economics & Business Economics ( email )

Fuglesangs Alle 4
Aarhus V, 8210

Danish Finance Institute ( email )

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

Paper statistics

Abstract Views
PlumX Metrics