Household Income Growth and Firm Valuation: Evidence from REITs

44 Pages Posted: 19 Apr 2021 Last revised: 24 Apr 2023

See all articles by Zifeng Feng

Zifeng Feng

The University of Texas at El Paso

Date Written: April 21, 2023


This article investigates the relationship between a firm's market valuation and the household income growth in its asset locations. Using income tax data from the Internal Revenue Service and individual establishment information of U.S. equity real estate investment trusts (REITs) from 2000 to 2019, the article constructs an aggregated measure of household income growth for each firm based on its asset locations in various metropolitan areas. The paper adopts an identification strategy that links household income shocks to firm valuation. The results indicate that firm-specific household income growth positively affects firm value (measured as firm Q) and shareholder value (measured as market-to-book equity ratio). These findings suggest that local residents' income is crucial in portfolio construction and operation.

Keywords: household income, asset location, firm Q, market-to-book, REIT

JEL Classification: D31, G32, R3

Suggested Citation

Feng, Zifeng, Household Income Growth and Firm Valuation: Evidence from REITs (April 21, 2023). Available at SSRN: or

Zifeng Feng (Contact Author)

The University of Texas at El Paso ( email )

500 W. University Ave.
El Paso, TX 79968
United States

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