Cross-Border Real Estate Investment

Wed 1 November 2017

Mill Lane Lecture Rooms

The foreign direct investment (FDI) literature documents that higher quality corporate governance, at both the national level and the firm level, is associated with a greater likelihood to invest abroad and to take larger stakes when investing abroad. We examine a unique set of international real estate holdings and corporate governance data to evaluate the comparability of real estate investment to FDI more broadly. Our results at both the national and firm level indicate that real estate transactions differ fundamentally from other types of FDI. Specifically, property nation governance, real estate firm headquarter nation governance, and firm level governance are negatively associated with the propensity to invest across borders. Further, firm level corporate governance is negatively related to the stake acquired in foreign property investment. The firm level results appear to be driven largely by non-U.S. firms. Overall, these results are counter to the more general FDI literature.

McKay is an associate professor in the Perella Department of Finance at Lehigh University and the Collins-Goodman Chair in Real Estate Finance. His formal training includes advanced degrees in both Finance and Real Estate Development from Florida State University and MIT, respectively, with an undergraduate degree in Finance from the University of Utah. He also has six years of professional experience which includes managing the commercial real estate development process for Target Corporation in Boston, New York, Philadelphia and Washington DC, and commercial real estate brokerage in Salt Lake City. McKay frequently publishes in top real estate journals in addition to main stream finance outlets and serves on the editorial board of the Journal of Real Estate Finance and Economics. He was recently ranked the #12 author in the world for research productivity in the top three real estate journals during the 2012-2016 time period (Saginor, 2016). Recent work has dealt with topics such as international real estate investment, commercial brokerage, and securitized real estate equity taxation modeling.

Cost: free