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

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.
 

Download Entire Article

Keywords

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

Back to Previous Page