Home purchase restriction, real estate investment, and corporate innovation

Weida Kuang (), Changyu Chen () and Qilin Wang ()
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Weida Kuang: Renmin University of China
Changyu Chen: Renmin University of China
Qilin Wang: Hunan University

Frontiers of Business Research in China, 2020, vol. 14, issue 1, 1-21

Abstract: Abstract It is ubiquitous for non-real estate firms to conduct real estate business in China. Home purchase restriction (HPR) affects corporate innovation by dampening the real estate investment of non-real estate firms. The extant literature has examined the impact of HPR on corporate innovation, but it has not focused on the expectation of HPR and the endogeneity problem. Employing a dataset of 1830 listed non-real estate firms over the period 2009–2016, this research explores the expectation of HPR on corporate innovation based on the motivations for real estate investment in non-real estate firms. We demonstrate that HPR facilitates the enhancement of research and development (R&D) investment in non-real estate listed firms by hindering real estate investment, particularly for non-high-tech firms. The effects of HPR arrive at the crest in the third implementation year and remain steady thereafter. The real estate investment of non-real estate firms rebounds and the R&D investment declines along with the cancellation of HPR. Tackling the selection bias and endogeneity problems, the baseline results are also robust. Hence, HPR should serve as a long-term vehicle to improving corporate innovation, in addition to preventing housing speculation.

Keywords: Home purchase restriction (HPR) expectation; Real estate investment; Non-real estate firms; Corporate innovation (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1186/s11782-020-00091-5

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