Collateral Values and Corporate Employment
September 2015
Working Paper Number:
CES-15-30R
Abstract
We examine the impact of real estate collateral values on corporate employment. Our empirical strategy exploits regional variation in local real estate price growth, firm-level data on real estate holdings, as well as establishment-level data on employment and the location of firms' operations from the U.S. Census Bureau. Over the period from 1993 until 2006, we show that a typical U.S. publicly-traded firm increases employment expenditures by $0.10 per $1 increase in collateral. We show this additional hiring is funded through debt issues and the effects are stronger for firms likely to be financially constrained. These firms increase employment at establishments outside of their core industry focus and away from the location of real estate holdings, leading to regional spillover effects. We document how shocks to collateral values influence labor allocation within firms and how these effects show up in the aggregate.
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:
investment,
market,
macroeconomic,
acquisition,
financial,
leverage,
sector,
recession,
state,
valuation,
lending,
loan,
bank,
borrowing,
spillover,
debt,
contract,
equity,
asset,
collateral,
creditor,
mortgage
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Metropolitan Statistical Area,
Census of Manufactures,
Annual Survey of Manufactures,
Total Factor Productivity,
Securities and Exchange Commission,
Longitudinal Business Database,
Chicago Census Research Data Center,
Census of Manufacturing Firms,
Employer Identification Numbers,
North American Industry Classification System
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