Tingyu Zhou

Retail Agglomeration and Competition Externalities: Evidence from Openings and Closings of Multiline Department Stores in the US

From the perspective of an existing retailer, the optimal size of a cluster of retail activity represents a trade-off between the marginal increases in consumer attraction from another store against the depletion of the customer base caused by an additional competitor. We estimate opening and closing probabilities of multi-line department stores (“anchors”) as a function of pre-existing anchors by type of anchor store (low-priced, mid-priced or high-priced) using a bias corrected probit model with county and year fixed effects. We find strong negative competitive effects of an additional same type but no effect on openings of anchors of another type.

Do Principles Pay in Real Estate Crowdfunding

This article uses a hand-collected sample of 733 projects from seven leading U.S.-based real estate crowdfunding (RECF) platforms. We analyze whether property, financing, and crowdfunding campaign characteristics, as well as information risk, can explain the expected returns of RECF campaigns based on the principles of investment risks in the real estate market. In line with these principles, we find that projects with higher investment risk (commercial real estate and development or redevelopment) on average have higher expected returns. The financing characteristics consistently indicate that equity-financed projects and higher leverage levels correlate with higher expected returns. Higher expected returns are also associated with the campaign characteristics of later payments to investors and higher minimum investment amounts. Finally, we document a consistently negative relationship between location-based information risk factors (measured by internet penetration, financial establishments, and related growth rates) and the offered expected returns.

Geographic Proximity and Managerial Alignment: Evidence from Asset Sell-Offs by Real Estate Investment Trusts

While the relation between geographic dispersion and firm value has been extensively studied, there are intriguing aspects that we do not yet understand. For example, Bernile, Kumar and Sulaeman (2015) report that, “local investors may perceive an informational advantage where there is in fact none.” Additionally, when we talk of local assets versus distant assets, there is little data showing what that means. REITs offer a unique and more complete data source of evidence about the proximity issue and value. In our unique panel dataset of more than 800,000 property-year observations, we find that local must be carefully evaluated as in most cases these REITs own a wide pool of geographically diversified assets. We apply a two-stage sequential choice model to mitigate selection bias at the firm-level and property-level. We find that REITs tend to dispose of distant properties and there is a negative relation between distance and cumulative abnormal returns. The top-ten MSAs in our disposition sample were over 860 miles (1,388 kilometers) from their REIT headquarters (HQs). The average cumulative abnormal return (CAR) was over three times as large and statistically significant for those dispositions that were below the median distance compared to those farther. However, further analyses show that headquarters that were in smaller areas (below the mean by population) were the only REITs to have positive abnormal returns. Thus, the gain is to firms that are located in smaller areas and who dispose of properties closer to their HQs. The gains are monotonically declining by distance from their HQs. This evidence is supportive of managerial alignment theory in the literature.Further, informational and social factors explain corporate decisions on asset sell-offs: this social interaction effect exists for those HQs located in less-populated areas. Consistent with the hypothesis of Landier, Nair and Wulf (2009), we find a positive and significant relation between aggregated proximity of a firm’s property holdings (Geographic HHI) and employee friendliness, indicating proximity between a particular firm’s headquarters and its underlying properties is associated with poor shareholder protection due to better employee protection. Together, these findings suggest a dominant role for the managerial alignment hypothesis. We find in particular that for HQs in less-populated MSAs, the managerial alignment effect dominates the information asymmetry effect.