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

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  • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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  12. Jin, Yi & Leung, Charles Ka Yui & Zeng, Zhixiong, 2010. "Real Estate, the External Finance Premium and Business Investment: A Quantitative Dynamic General Equilibrium Analysis," MPRA Paper 26722, University Library of Munich, Germany.
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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. 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.
  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.

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