We study whether and how the market value of corporate real estate (REMV) shapes acquirer M&A performance. Using hand-collected loan agreements linked to M&A deals, we show that financing secured by real estate embeds tighter acquisition covenants and that, unlike other collateral, real estate collateral is associated with higher announcement returns. Instrumental-variables estimates based on headquarters-state property taxes, crime rates, and local natural-disaster exposure support a causal link from REMV to M&A deal performance. A two-by-two design crossing industry growth opportunities with acquisition covenants shows that both lender screening and financial flexibility mechanisms operate: returns are strongest when growth opportunities are high and covenants are restrictive, remain positive but smaller when only one channel is active, and vanish when both are weak. Consistent with ex-ante screening, acquirers borrowing against real estate are more likely to withdraw deals with negative announcement reactions. Our findings highlight the importance of real estate collateral in shaping corporate investment outcomes and suggest that real estate appreciation enhances firms' capacity to undertake more disciplined and value-creating acquisitions.

We conjecture that a firm's organization capital (OC) has a substitution effect on its executive pay-for-performance sensitivity (PPS) and empirically document a robust and significant substitution effect of OC on executive PPS. We use state-level unemployment insurance benefits as an instrumental variable for OC and show that the documented OC-PPS substitution effect is likely causal. Results are also robust to a stacked difference-in-differences estimation approach based on a quasi-natural experiment of exogenous CEO turnovers due to health-related issues. Our findings strongly suggest that greater OC substitutes for costly executive incentive compensation to sustain firm productivity and increase shareholder wealth.