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Home Values and Firm Behavior

Bahaj, S; Foulis, A; Pinter, G; (2020) Home Values and Firm Behavior. American Economic Review , 110 (7) pp. 2225-2270. 10.1257/aer.20180649. Green open access

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Abstract

The homes of firm owners are an important source of finance for ongoing businesses. We use UK microdata to show that a £1 increase in the value of the homes of a firm's directors increases the firm's investment by £0.03. This effect is concentrated among firms whose directors' homes are valuable relative to the firm's assets, that are financially constrained, and that have directors who are personally highly levered. An aggregation exercise shows that directors' homes are as important as corporate property for collateral driven fluctuations in aggregate investment demand.

Type: Article
Title: Home Values and Firm Behavior
Open access status: An open access version is available from UCL Discovery
DOI: 10.1257/aer.20180649
Publisher version: https://doi.org/10.1257/aer.20180649
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management
URI: https://discovery.ucl.ac.uk/id/eprint/10134783
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