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

Bing Lu, Xiaofen Tan and Jinhui Zhang

Accounting and Finance, 2019, vol. 58, issue 5, 1319-1345

Abstract: This paper explores the impact of housing price appreciation on corporate total factor productivity (TFP) in Chinese A‐share listed corporations. Results show that increasing real estate prices negatively affect corporate TFP. Meanwhile, we find that the deterring effect is especially significant for state‐owned enterprises (SOEs), large corporations and manufacturing corporations. This research further provides suggestive evidence that managerial myopia may be one potential explanation for the crowding out effect of increasing housing prices. When home purchase is under restriction, however, the negative impact of rising housing prices on corporate TFP declines sharply. This study illustrates the efficiency cost of China's booming real estate market.

Date: 2019
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