Reputation and Asset Prices: Evidence from Trump Real Estate

Abstract

We analyze the impact of brand reputation on asset prices by exploiting the prominence of Donald Trump in Manhattan real estate. Our quasi-experiment identifies a 19% discount to condominiums in Trump-branded buildings after controversies surrounding Trump's presidential candidacy began in June 2015 up to 2022. The shock is immediately priced in the second half of 2015 and appears sufficiently large to prevent a liquidity shock. We create a monthly indicator of Trump's negative reputation in New York City using Twitter data and find that a one-standard-deviation increase in our indicator predicts a 6% price discount to branded units. Property assessment data indicates no tax benefits to owners of branded condominiums but imply a $1.1 billion decline in their properties' values. Overall, our results show that reputation shocks can be large and persistent and that reputational risk should be taken into account by risk managers.

Keywords: Trump, Real estate, Reputation, Quasi-experiment, Twitter data

JEL Classification: G41, R32, C21