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What Drives Fixed Asset Holding and Risk- Adjusted Performance of Corporates in China? An Empirical Analysis

Author Info

  • Yan Dong

    (Southwestern University of Finance and Economics, China)

  • Charles Ka Yui Leung

    ()

    (Department of Economics and Finance, City University of Hong Kong, Kowloon Tong, Hong Kong)

  • Dongliang Cai

    (Southwestern University of Finance and Economics, China)

Abstract

This paper attempts to shed light on the over-investment debate by investigating listed firms in China. Firms with a higher level of fixed asset holding and overhead expenses, and covered by preferential tax policies in China are found to be associated with lower risk-adjusted performance. In addition, the preferential tax policies encourage fixed asset investment. In contrast to some of the previous literature, state-ownership of firms, dividend policies, and ownership concentration are not robust predictors of risk-adjusted performance, and debt level, managerial shareholding, and profit per unit of asset are not robust predictors of fixed asset investments.

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Article provided by Asian Real Estate Society in its journal International Real Estate Review.

Volume (Year): 15 (2012)
Issue (Month): 2 ()
Pages: 141-164

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Handle: RePEc:ire:issued:v:15:n:02:2012:p:141-164
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Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA

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Keywords: Fixed asset holding; Corporate real estate; Over-investment theory; State-ownership; Tax-favor policy;

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Find related papers by JEL classification:
  • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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  11. Charles Ka Yui Leung & Wei Wang, 2007. "An Examination of the Chinese Housing Market through the Lens of the DiPasquale- Wheaton Model: a Graphical Attempt," International Real Estate Review, Asian Real Estate Society, vol. 10(2), pages 131-165.
  12. repec:ucp:bknber:9780226304557 is not listed on IDEAS
  13. Wu, Jing & Gyourko, Joseph & Deng, Yongheng, 2012. "Evaluating conditions in major Chinese housing markets," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 531-543.
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Cited by:

  1. Julan Du & Charles Ka Yui Leung & Derek Chu, 2014. "Return Enhancing, Cash-rich or simply Empire-Building? An Empirical Investigation of Corporate Real Estate Holdings," International Real Estate Review, Asian Real Estate Society, vol. 17(3), pages 301-357.
  2. Chen, Dong & Gao, Yanmin & Kaul, Mayank & Leung, Charles Ka Yui & Tsang, Desmond, 2014. "The role of sponsor and external management on the capital structure of Asian-Pacific REITs: the case of Australia, Japan, and Singapore," MPRA Paper 60490, University Library of Munich, Germany.
  3. Charles Ka Yui Leung & Edward Chi Ho Tang, 2015. "Speculating China Economic Growth through Hong Kong? Evidence from Stock Market IPOs and Real Estate Markets," International Real Estate Review, Asian Real Estate Society, vol. 18(1), pages 45-87.
  4. Leung, Charles Ka Yui & Tang, Edward Chi Ho, 2013. "Speculating China economic growth through Hong Kong? Evidence from the stock market IPO and real estate markets," MPRA Paper 46346, University Library of Munich, Germany.
  5. Hongyan Du & Yongkai Ma, 2012. "Corporate Real Estate, Capital Structure and Stock Performance: Evidence from China," International Real Estate Review, Asian Real Estate Society, vol. 15(1), pages 107-126.

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