Reputation and Asset Prices: Evidence from Trump Real Estate

54 Pages Posted: 18 Aug 2023

See all articles by Marlene Koch

Marlene Koch

University of Konstanz

Simon Stehle

University of Konstanz - Department of Economics

Rémi Vivès

Glendon College, York University

Date Written: August 17, 2023

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

Suggested Citation

Koch, Marlene and Stehle, Simon and Vivès, Rémi, Reputation and Asset Prices: Evidence from Trump Real Estate (August 17, 2023). Available at SSRN: https://ssrn.com/abstract=4543705 or http://dx.doi.org/10.2139/ssrn.4543705

Marlene Koch (Contact Author)

University of Konstanz ( email )

Fach 147
Universitätsstraße 10
Konstanz, D-78457
Germany

Simon Stehle

University of Konstanz - Department of Economics ( email )

Konstanz, 78457
Germany

Rémi Vivès

Glendon College, York University ( email )

2275 Bayview Ave
Toronto, M4N 3M6
Canada

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