The Collateral Channel: How Real Estate Shocks Affect Corporate Investment: Comment

Chaney, Sraer and Thesmar (2012) find that over the 1993{2007 period, a $1 increase in collateral (the value of real estate a firm actually owns) leads the representative US public corporation to raise its investment by$0.06. We first demonstrate that data Winsorization induces a strong bias in favour of finding this result. There is no relationship ($0.00 per$1) between the value of real estate a firm owns and its investment in the unaltered data. We also show that the identification approach based on local variations in real estate prices does not provide evidence on the collateral channel