The paper studies an often-observed phenomenon of diversification of manufacturing firms into real estate development in East Asian economies. Utilizing a sudden change in China＇s accounting standards that requires f...The paper studies an often-observed phenomenon of diversification of manufacturing firms into real estate development in East Asian economies. Utilizing a sudden change in China＇s accounting standards that requires firms to disclose information about their real estate holdings for investment purpose （or investment property）, we examine both the impact of such diversification on firms＇ investment in their original business and the stock market response to such diversification. Our results confirm there exists underinvestment in original business （or hollowing out of the real economy） for firms diversifying into real estate, and that there is a lack of investor response to such diversification, in both short-rim and long-run. Our study calls for further research on the role of real estate development in the long-run competitiveness of developing economies.展开更多
This paper investigates how institutional holding and earnings quality influence the liquidity of assets. Contrary to findings in developed markets, we document several novel results in China＇s stock market： （1） i...This paper investigates how institutional holding and earnings quality influence the liquidity of assets. Contrary to findings in developed markets, we document several novel results in China＇s stock market： （1） institutional holding negatively affects assets＇ liquidity, （2） earnings quality is negatively related with liquidity. Since earnings quality captures asymmetric information, low earnings quality induces high divergence in investor opinions and thus boosts market trading, and （3） interestingly, the effect of earnings quality on liquidity is greater if institutional investors＇ holding is at a high level. Overall, our findings cast doubt on the conventional wisdom that institutional investors and earnings quality improve market liquidity. The results are robust to different measures and alternative model specifications.展开更多
文摘The paper studies an often-observed phenomenon of diversification of manufacturing firms into real estate development in East Asian economies. Utilizing a sudden change in China＇s accounting standards that requires firms to disclose information about their real estate holdings for investment purpose （or investment property）, we examine both the impact of such diversification on firms＇ investment in their original business and the stock market response to such diversification. Our results confirm there exists underinvestment in original business （or hollowing out of the real economy） for firms diversifying into real estate, and that there is a lack of investor response to such diversification, in both short-rim and long-run. Our study calls for further research on the role of real estate development in the long-run competitiveness of developing economies.
基金Acknowledgements We gratefully acknowledge the financial support from the National Natural Science Foundation of China （No. 71173078, 70803013）.
文摘This paper investigates how institutional holding and earnings quality influence the liquidity of assets. Contrary to findings in developed markets, we document several novel results in China＇s stock market： （1） institutional holding negatively affects assets＇ liquidity, （2） earnings quality is negatively related with liquidity. Since earnings quality captures asymmetric information, low earnings quality induces high divergence in investor opinions and thus boosts market trading, and （3） interestingly, the effect of earnings quality on liquidity is greater if institutional investors＇ holding is at a high level. Overall, our findings cast doubt on the conventional wisdom that institutional investors and earnings quality improve market liquidity. The results are robust to different measures and alternative model specifications.
