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

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  • Dong, Yan
  • Leung, Charles Ka Yui
  • Cai, Dongliang

Abstract

This paper attempts to shed light on the over-investment debate by investigating listed firms in China. Firms with higher level of fixed asset holding, higher level of overhead expenses, and being covered by the tax-favor policy in China are found to be associated with a lower risk-adjusted performance. In addition, the tax-favor policy itself encourages fixed asset investment. In contrast to some of the previous literature, state-ownership of firms, dividend policy, 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 investment.

Suggested Citation

  • Dong, Yan & Leung, Charles Ka Yui & Cai, Dongliang, 2011. "What Drives Fixed Asset Holding and Risk-Adjusted Performance of Corporate in China? An Empirical Analysis," MPRA Paper 29128, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:29128
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    References listed on IDEAS

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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. Dong Chen & Yanmin Gao & Mayank Kaul & Charles Ka Yui Leung & Desmond Tsang, 2016. "The Role of Sponsors and External Management on the Capital Structure of Asian-Pacific REITs: The Case of Australia, Japan, and Singapore," International Real Estate Review, Asian Real Estate Society, vol. 19(2), pages 197-221.
    3. 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.
    4. 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.
    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.

    More about this item

    Keywords

    fixed asset holding; corporate real estate; over-investment theory; state-ownership; tax-favor policy;

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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