From Wall Street to Main Street: How Corporate Diversity Shapes Cities

with Avis Devine and Erkan Yonder, Working Paper (2022)

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The real estate industry is traditionally considered a male-dominated industry. At the same time, the industry shapes the quantity and quality of space in U.S. cities. In this paper, we study the impact of board gender diversity on the risk management decisions of 180 U.S. Real Estate Investment Trusts (REITs) during the 2001 to 2018 period. Using a bottom-up analysis on the properties in REIT portfolios, we find significant risk-reduction benefits associated with gender diversity, documenting that more gender-diverse REITs are more actively investing in environmentally-sustainable real estate. In addition, female CEOs are less overconfident than their male counterparts, leading to less active trading and a longer hold period of assets. Finally, more gender-diverse REITs are less geographically diversified, focusing capital allocations on a smaller number of states and cities. We conclude that diversity in real estate firms on Wall Street has real-life implications for Main Street, which is important given the growth of REITs and private equity real estate firms.