How do Personal Real Estate Transactions Affect Productivity and Risk Taking? Evidence from Professional Asset Managers

David Ling (), Yan Lu and Sugata Ray

Real Estate Economics, 2021, vol. 49, issue S1, 7-40

Abstract: We examine the personal real estate transactions of professional asset managers to understand the effect of these transactions on professional productivity and risk proclivities. We find that 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, especially when purchasing investment properties and when purchases use extensive leverage. This suggests consistent risk‐taking appetites across personal and professional portfolios.

Date: 2021
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https://doi.org/10.1111/1540-6229.12284

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