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The impact of intra- and inter-provincial geographic diversification on real estate firm performance: evidence from China

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  • Yayi Wei

Abstract

There is an intense debate regarding the relationship between the firm performance and the degree of geographic diversification. Yet, the results are inconsistent. Learning from the literature of international business, we divide the overall geographic diversification into intra-provincial and inter-provincial diversification to obtain a clearer insight of this relationship. In this research, we manually collected data from listed Chinese real estate firms’ annual reports over 10 years. Using both the property-based and the sold-area-based measurement of geographic diversification level, we find that a more diversified strategy would lead to better firm performance when diversifying within a specific province. Meanwhile, firms would confront a firm value reduction at the first stage and then higher firm performance when diversifying across provinces. These findings add to the extant literature on the impact of geographic diversification on firm performance and shed light on the expanding strategy for real estate firms. The future work of this study is to examine the moderating effect of the geographic distance between firms’ headquarters and properties in each city on this relationship.

Suggested Citation

  • Yayi Wei, 2023. "The impact of intra- and inter-provincial geographic diversification on real estate firm performance: evidence from China," ERES eres2023_212, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2023_212
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    More about this item

    Keywords

    Firm Performance; Inter-provincial diversification; Intra-provincial diversification;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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