The crowding out effect of booming real estate markets on corporate TFP: evidence from China

Lu, Bing; Tan, Xiaolu; Zhang, Jinhui

doi:10.1111/acfi.12451

Cited by 26 publications

(23 citation statements)

References 36 publications

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“…Based on the 2012 industry classification criteria of the China Securities Regulatory Commission, we select China's listed firms in the manufacturing industry as the research setting. We select manufacturing firms for the following reasons: (i) the manufacturing industry is the representative of 'Made in China' (Lu et al, 2019); (ii) manufacturing industry plays a dominant role in a country's economy (Hodgson et al, 2018); and (iii) manufacturing firms account for approximately 63 percent of China's listed firms, which provides sufficient data to better understand the focal issues of China's economy. Together, we choose China's listed firms in the manufacturing industry as sample firms.…”

Section: Methodsmentioning

confidence: 99%

Does economic policy uncertainty raise corporate precautionary cash holdings? Evidence from China

Zhou

Xue

et al. 2020

Accounting & Finance

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Using China as the research setting, this paper investigates the relationship between economic policy uncertainty and corporate precautionary cash holdings. Empirical results show a U‐shaped relation between economic policy uncertainty and corporate precautionary cash holdings. Empirical analysis, in terms of ownership structure, firm size, corporate competitiveness and geographical location, further shows that (i) the effects for economic policy uncertainty in both state‐owned and non‐state‐owned enterprises are significant, but the effect is stronger for state‐owned enterprises; (ii) such significant effect is also found more strongly in small and medium‐sized enterprises and highly competitive enterprises; and (iii) the effects for eastern, central and western China are all statistically significant, but the effect is strongest for eastern China.

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Section: Methodsmentioning

confidence: 99%

Does economic policy uncertainty raise corporate precautionary cash holdings? Evidence from China

Zhou

Xue

et al. 2020

Accounting & Finance

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“…This finding suggests that the impact of housing market speculation on firm productivity is not significantly different between high-tech industry and traditional industry. The results from Lu et al (2019) indicate that the deterrent effect of housing price appreciation is signifi cant for manufacturing fi rms and insignifi cant for service fi rms, suggesting that industrial-level features play a crucial role in determining the relationship between housing price and fi rm productivity. However, they did not investigate the differences between sectors within the manufacturing industry.…”

Section: Resultsmentioning

confidence: 99%

“…However, they did not investigate the differences between sectors within the manufacturing industry. Firms in these two industries have distinct characteristics, so using the same method to calculate productivity, as in Lu et al (2019), would be inappropriate.…”

Section: Resultsmentioning

confidence: 99%

Housing Market Speculation and Firm Productivity: Evidence from China

Chen

Feng

2021

China and World Economy

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An appreciation in the price of housing could generate speculation opportunities for enterprises. Many firms try to seize these opportunities for quick returns. This may harm their productivity. We use the real estate boom and the investment activities of Chinese manufacturing firms during 2006–2017 to examine the processes and the net effect of housing market speculation on firm productivity. We find that housing market speculation negatively affects firm productivity by crowding out investments in research and development and productive fixed assets, and the positive effect brought about by a strengthened balance sheet and better financing capacity is outweighed by the crowding‐out effect. This negative impact is more evident in state‐owned firms, but is mitigated in regions and periods with better business environments. Set in the overheated housing market in China, our study contributes to the existing literature by exploring how firms’ investments outside of their main business influence firm behavior and productivity.

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“…According to them, valuation formulae must take into account trends in the internal mobility of property ownership. The direct link between real estate prices and corporate productivity in Chinese companies is pointed out by Lu, Tan, and Zhang [59]. Goldstein [60] analyzes dominant sociological aspects related to, among other things, labor mobility in the US, for real estate investments and valuations.…”

Section: Literary Researchmentioning

confidence: 99%

Determining the Increase in a Building’s Appreciation Rate Due to a Reconstruction

et al. 2020

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The reconstruction of buildings generally prolongs their useful life, increases their utility value, and last but not least, leads to an increase in their value. These assumptions only apply if an independent third party reaches the same conclusion together with the owner. However, the undesirable effect of the reconstruction of a building may be a decrease in its value. The aim of this contribution is to determine the change in value of an older sample building assessed in the included case study as a result of its reconstruction. Valuation methods are applied, which, as it turns out, reveal the inaccuracy of the subjective view of the person who reconstructed the building. The resulting change in the value of the sample building is discussed from the point of view of the applied valuation methods and other value-creating aspects (subjective view of the owner on the value of the building, historical value of the building, etc.). The contribution concludes with recommendations for maximizing the increase in value of a property through its reconstruction so as to eliminate the risk of a decrease in its value.

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The crowding out effect of booming real estate markets on corporate TFP: evidence from China

Cited by 26 publications

References 36 publications

Does economic policy uncertainty raise corporate precautionary cash holdings? Evidence from China

Does economic policy uncertainty raise corporate precautionary cash holdings? Evidence from China

Housing Market Speculation and Firm Productivity: Evidence from China

Determining the Increase in a Building’s Appreciation Rate Due to a Reconstruction

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