Corporate real estate risk influence investment and financing during a period of external shock–evidence by COVID-19 pandemic
DOI: https://doi.org/10.3846/ijspm.2026.27779Abstract
In addition to the collateral effect of corporate real estate, recent studies highlight that the crowding effect and irreversibility of corporate real estate may pose risks to capital allocation. This study uses the 2020 COVID-19 pandemic as a black swan event to analyze how the corporate real estate risks and different real estate components relate to investment and leverage during the COVID-19 pandemic. This study further examines potential structural changes in capital expenditure and debt financing across four industry groups in the post-pandemic period. The results indicate that real estate risk negatively affects both investment and leverage, and this effect becomes more pronounced during the COVID-19 pandemic. Both land and building holdings are found to negatively influence leverage during the non-COVID-19 period; however, their effects are not statistically significant during the pandemic period. Manufacturing firms, particularly those in the electronics sector, show reduced capital expenditures, while firms in the tourism & others category increase leverage in the post-COVID-19 period under high real estate risk. The findings highlighting how industries with different asset structures may be exposed to varying levels of real estate risk and adopt distinct strategies in response to external shocks.
Keywords:
corporate real estate risk, collateral effect, firm resilience, investment, debt financing, COVID-19 pandemicHow to Cite
Share
License
Copyright (c) 2026 The Author(s). Published by Vilnius Gediminas Technical University.
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Amankwah-Amoah, J., Khan, Z., Wood, G., & Knight, G. (2021). COVID-19 and digitalization: The great acceleration. Journal of Business Research, 136, 602–611. https://doi.org/10.1016/j.jbusres.2021.08.011
Amundi Asset Management. (2021, September). Real assets favoured in a post-Covid-19 world, but higher fragmentation require scrutiny [Investment Insights Blue paper]. https://research-center.amundi.com/article/real-assets-favoured-post-covid-19-world-higher-fragmentation-requires-scrutiny
Antipova, T. (2021). Coronavirus pandemic as Black Swan event. In T. Antipova (Ed.), Lecture notes in networks and systems: Vol. 136. Integrated science in digital age 2020 (pp. 356–366). Springer. https://doi.org/10.1007/978-3-030-49264-9
Aretz, K., Campello, M., & Marchica, M. T. (2020). Access to collateral and the democratization of credit: France’s reform of the Napoleonic Security Code. The Journal of Finance, 75(1), 45–90. https://doi.org/10.1111/jofi.12846
Balemi, N., Füss, R., & Weigand, A. (2021). COVID-19’s impact on real estate markets: Review and outlook. Financial Markets and Portfolio Management, 35(4), 495–513. https://doi.org/10.1007/s11408-021-00384-6
Becchetti, L., Di Giacomo, S., & Pinnacchio, D. (2008). Corporate social responsibility and corporate performance: Evidence from a panel of US listed companies. Applied Economics, 40(5), 541–567. https://doi.org/10.1080/00036840500428112
Bergeaud, A., Eyméoud, J. B., Garcia, T., & Henricot, D. (2023). Working from home and corporate real estate. Regional Science and Urban Economics, 99, Article 103878. https://doi.org/10.1016/j.regsciurbeco.2023.103878
Berger, A. N., & Udell, G. F. (1990). Collateral, loan quality and bank risk. Journal of Monetary Economics, 25(1), 21–42. https://doi.org/10.1016/0304-3932(90)90042-3
Campello, M., Connolly, R. A., Kankanhalli, G., & Steiner, E. (2022). Do real estate values boost corporate borrowing? Evidence from contract-level data. Journal of Financial Economics, 144(2), 611–644. https://doi.org/10.1016/j.jfineco.2021.06.021
Chaney, T., Sraer, D., & Thesmar, D. (2012). The collateral channel: How real estate shocks affect corporate investment. American Economic Review, 102(6), 2381–2409. https://doi.org/10.1257/aer.102.6.2381
Choi, J. (2025). Financial flexibility or financial constraints? Zero-leverage firms during the COVID-19 pandemic. Research in International Business and Finance, 74, Article 102663. https://doi.org/10.1016/j.ribaf.2024.102663
Chong, J., & Phillips, G. M. (2022). COVID-19 losses to the real estate market: An equity analysis. Finance Research Letters, 45, Article 102131. https://doi.org/10.1016/j.frl.2021.102131
Cook, D. O., Kieschnick, R., & Moussawi, R. (2021). Operating lease obligations and corporate cash management. Journal of Corporate Finance, 69, 1–12. https://doi.org/10.1016/j.jcorpfin.2021.102008
Cooke, H., Appel-Meulenbroek, H. A. J. A., & Arentze, T. A. (2019). Adjustment of corporate real estate during a period of significant business change. International Journal of Strategic Property Management, 23(3), 171–186. https://doi.org/10.3846/ijspm.2019.7954
Deng, X., Ong, S. E., & Qian, M. (2018). Real estate risk, corporate investment and financing choice. The Journal of Real Estate Finance and Economics, 57(1), 87–113. https://doi.org/10.1007/s11146-017-9599-y
Executive Yuan, R.O.C. (2020). Relief, recovery, and revitalization program in response to the COVID-19 pandemic in 2020. Department of Transportation, Environment, and Resources. https://www.ey.gov.tw/Page/448DE008087A1971/46e8b1b8-3758-4732-8f15-d2254bf9ee4d
Fougère, D., Lecat, R., & Ray, S. (2019). Real estate prices and corporate investment: Theory and evidence of heterogeneous effects across firms. Journal of Money, Credit and Banking, 51(6), 1503–1546. https://doi.org/10.1111/jmcb.12631
Fung, D. W., Lee, W. Y., & Yang, C. C. (2025). Surviving the storm: Evaluating the role of enterprise risk management in property and liability insurers’ performance during the COVID-19 pandemic. Journal of Corporate Finance, 91, Article 102751. https://doi.org/10.1016/j.jcorpfin.2025.102751
Gan, J. (2007). Collateral, debt capacity, and corporate investment: Evidence from a natural experiment. Journal of Financial Economics, 85(3), 709–734. https://doi.org/10.1016/j.jfineco.2006.06.007
Hossain, M. I., Duong, H. N., Al Mamun, M., & Docherty, P. (2023). Collateral shocks and M&A decisions. Journal of Corporate Finance, 82, Article 102433. https://doi.org/10.1016/j.jcorpfin.2023.102433
Kennedy, G., Killeen, N., Skouralis, A., Velasco, S., & Wosser, M. (2021). COVID-19 and the commercial real estate market in Ireland (No. 4/FS/21). Central Bank of Ireland.
Kim, J., Lee, H. W., & Chung, G. H. (2024). Organizational resilience: Leadership, operational and individual responses to the COVID-19 pandemic. Journal of Organizational Change Management, 37(1), 92–115. https://doi.org/10.1108/JOCM-05-2023-0160
Kodama, W., Morgan, P., Azhgaliyeva, D., Trinh, L., & Kim, K. (2024). Family business during the COVID-19 pandemic in Asia: Role of government financial aid and coping strategies. World Development, 182, Article 106653. https://doi.org/10.1016/j.worlddev.2024.106653
McGrath, R. G. (2013). The end of competitive advantage. Harvard Business Review Press.
Ministry of Economic Affairs, R.O.C. (2020). Measures for relief and revitalization of industries and enterprises facing operational difficulties due to the impact of severe infectious pneumonia. https://law.moj.gov.tw/Eng/index.aspx
Oladiran, O., Hallam, P., & Elliot, L. (2023). The COVID-19 pandemic and office space demand dynamics. International Journal of Strategic Property Management, 27(1), 35–49. https://doi.org/10.3846/ijspm.2023.18003
Rampini, A. A., & Viswanathan, S. (2013). Collateral and capital structure. The Journal of Financial Economics, 109(2), 466–492. https://doi.org/10.1016/j.jfineco.2013.03.002
Seger, J., & Pfnür, A. (2021). The impact of structural changes on corporate real estate ownership: Evidence from Germany. International Journal of Strategic Property Management, 25(1), 1–16. https://doi.org/10.3846/ijspm.2020.13776
Shleifer, A., & Vishny, R. W. (1992). Liquidation values and debt capacity: A market equilibrium approach. The Journal of Finance, 47(4), 1343–1366. https://doi.org/10.1111/j.1540-6261.1992.tb04661.x
Tanrıvermiş, H. (2020). Possible impacts of COVID-19 outbreak on real estate sector and possible changes to adopt: A situation analysis and general assessment on Turkish perspective. Journal of Urban Management, 9(3), 263–269. https://doi.org/10.1016/j.jum.2020.08.005
Taiwan Semiconductor Manufacturing Company. (2024). TSMC annual report. https://investor.tsmc.com/chinese/annual-reports
Tuzel, S. (2010). Corporate real estate holdings and the cross-section of stock returns. The Review of Financial Studies, 23(6), 2268–2302. https://doi.org/10.1093/rfs/hhq006
Wraight, T. (2019). From Reagan to Trump: The origins of US neoliberal protectionism. The Political Quarterly, 90(4), 735–742. https://doi.org/10.1111/1467-923X.12709
Wang, J. B. (2023). Natural disasters and firm leasing: A collateral channel. Journal of Corporate Finance, 82, Article 102428. https://doi.org/10.1016/j.jcorpfin.2023.102428
Wooldridge, J. M. (2016). Introductory econometrics: A modern approach (6th ed.). Cengage learning.
Zhao, D., & Sing, T. F. (2015). Corporate real estate ownership and productivity uncertainty. Real Estate Economics, 44(2), 521–547. https://doi.org/10.1111/1540-6229.12112
View article in other formats
CrossMark check
Published
Issue
Section
Copyright
Copyright (c) 2026 The Author(s). Published by Vilnius Gediminas Technical University.
License
This work is licensed under a Creative Commons Attribution 4.0 International License.