Lihong Qian

Corporate real estate, stock market valuation and the reputational effects of eco-certification

Abstract Improving the energy efficiency of retail stores has become an important strategy for retailers. However, why do some retailers obtain Energy Star certification for their stores while others do not? We argue that retailers pursue this certification to capture reputational benefits of the Energy Star label when their stock market valuation is low. Using longitudinal data for US retailers (grocery and department stores) over the period of 2002 to 2014, we find that stock market valuation measured by Tobin’s Q explains (1) the likelihood of a retailer obtaining Energy Star certification and (2) the share of Energy Star-certified stores in a retailer’s portfolio. Operating expenses on the other hand do not appear to drive the decision to obtain Energy Star certification. Our results also suggest that the motivations of retailers to obtain LEED and Energy Star certification differ.

The impact of asset location on REIT merger decisions

Theories about the motivation to merge, derived from non-real estate investment trust firms, have been found insufficient to explain real estate investment trust (REIT) mergers. Additionally, previous REIT merger studies neglect asset-specific drivers of mergers. We investigate the impact of location of the partnering firm’s assets on the decision to merge, using transaction cost economic theory as theoretical framework. We employ a pair-firm approach that jointly assesses the resources of REITs and their partnering firms. We find evidence that REITs are more likely to merge if targeted assets are (1) in primary real estate markets, (2) in strategically important growth markets or (3) associated with development or management expertise in markets a REIT has substantial investments in. Our findings emphasise the importance of portfolio considerations for REIT mergers that are specific to the REIT industry.