| Ever since advance sales system of commercial houses was implemented in 1995,the real estate industry in China has been developing rapidly,which contributes to the high-speed growth of China's economy.Even though the increasing scale of investment in real estate has fulfilled citizens' needs for residential houses,industry-wide over-investment comes with the “irrational exuberance” in real estate market,which results in overstocks of commercial houses.As overstocks has become an essential issue for the whole society,central government of China requires that real estate enterprises should “destock” in the process of economic and social development in 2016,which is also one of the five major missions of the Supply-Side Structural Reform during the period of 13 th Five-Year Plan.Among the five major missions of Supply-Side Structural Reform,the mission of destocking plays an important dominant role.If the mission of real estate destocking is not solved,it will undoubtedly become the obstacle to the promotion of the other four missons.Therefore,real estate destocking is not only related to the healthy development of the real estate industry,but also to the smooth operation of China's macroeconomic,which has important practical significance.Based on the above realistic background,this study investigates the motivation and economic consequences of real estate enterprises' destocking behavior,with sample of listed companies in real estate industry from year 2003-2017.The research idea is "motivation influences behavior,behavior decides consequence".Specifically,the main work of this paper is as follows.Firstly,this paper combs the relevant theories such as government intervention theory,inventory holding theory and capital structure theory.Then,this paper reviews the relevant literatures including determinants of enterprise inventory,influencing factors of the capital structure of real estate enterprises and the relationship between inventory level and enterprise performance.In addition,this paper summarizes the relevant institutional background from four aspects.They are tax sharing system reform,cadre assessment system,market-oriented reform and the development of China's real estate market.Secondly,based on unique institutional background of China's transition economy,this study investigates whether the nature of ownership will impact destocking behavior of the real estate enterprises from the perspective of stock investment.After controlling other influencing factors for destocking,empirical results show that state-owned real estate companies are less likely to destock than their non-state-owned counterparts.Further tests show that this phenomenon is more pronounced when the controlling shareholder holds larger proportion of ownerships,or when companies are located in area of poor GDP growth.When state-owned real estate companies have multiple layers of pyramidal structure to insulate themselves from political interference,the likelihood of destocking is increasing.In addition,under the background of destocking,compared with non-state-owned real estate enterprises,the state-owned real estate enterprises have stronger willingness to destock.Thirdly,considering the characteristics of high leverage in the real estate industry,this paper examines the impact of real estate enterprises' destocking behavior on their excess leverage,rather than leverage itself.Excessive leverage is divided into short term excess leverage measured by periodic solvency and long term excess leverage measured by real asset-liability ratio minus target asset-liability ratio.Further research explores whether the relationship between the non-destocking behavior of real estate enterprises and their excess leverage will be affected by the nature of ownership,the level of financial development and macro-control policies.The empirical results show that the real estate enterprises without destocking are more likely to be excess leverage.Specifically,because the state-owned real estate enterprises have more advantages of debt financing and soft budget constraint,the relationship between non-destocking behavior and excess leverage only appears in the state-owned real estate enterprises.With the improvement of financial development level,the effect of soft constraints on the loan budget of banks to real estate enterprises will be weakened,making the excessive leverage of real estate enterprises without destocking only appear in areas with low financial development level.Macro-control policies will affect the supply of funds,so in the period of macro-control contraction,real estate enterprises without destocking are more likely to incur short-term excessive leverage because of the restriction of financing channels.In the relaxed period of macro-control policy,because of the sufficient supply of financial market,real estate enterprises without destocking are more likely to incur excess leverage in the long term.Fourthly,considering the fact that inventory plays three major roles in value creation,organizational flexibility and operation control in modern enterprise organizations,this paper empirically examines the impact and mechanism of real estate enterprises' non-destocking behavior on their firm value.Further research explores whether the relationship between the non-destocking behavior of real estate enterprises and firm value will be affected by the nature of ownership,future house price growth and economic policy uncertainty.The empirical results show that the non-destocking behavior of real estate enterprises not only makes them face higher future financial risks,but also enhances their market competitiveness in future products.But on the whole,the effect of financial risk is greater than the effect of product market position promotion.The non-destocking behavior of real estate enterprises will significantly decrease firm value.Specifically,the negative correlation between the non-destocking of real estate enterprises and the firm value only appears in the state-owned real estate enterprises.The possible reason is that the non-destocking behavior of non-state-owned real estate enterprises is the result of their capital advantages and strategic choices,while the non-destocking behavior of state-owned real estate enterprises deviates from the principle of maximizing the value of enterprises,because of the government intervention and capital mismatch.When the house price falls in the future,the real estate enterprises' non-destocking behavior will significantly reduce the firm value.With the increasing uncertainty of economic policy,the non-destocking behavior of real estate enterprises has more obvious impairment on the firm value.The possible contributions of this paper include the following aspects.Firstly,from the perspective of supply of real estate enterprises,this paper expands the relevant research on real estate destocking,and provides theoretical support for deepening the Supply-Side Structural Reform.The dissolution of real estate inventory is determined by both supply and demand.Most of the existing literatures discuss the determinants form the perspective of demand,such as consumer structure,urbanization level,housing prices,economic growth and other factors.However,inventory of real estate industry is the collection of inventory of real estate enterprises.Under the background that destocking has become a national task,it is necessary to return the discussion of real estate inventory to the level of real estate enterprise,which is the main supplier of real estate inventory.Based on the special institutional background of our country,this paper constructs an analytical framework of “motivation affects behavior,behavior decides consequence”.This paper systematically examines the motivation and micro-economic consequences of real estate enterprises' destocking behavior.This paper raises the real problem of real estate destocking to a theoretical level,which provides a theoretical basis for deepening the structural reform of the supply side.Secondly,through the test of the difference between the state-owned and non-state-owned real estate enterprises' destocking behavior,this paper adds new empirical evidence for the study of economic consequences of government intervention under the weak institutional environment.At present,the research on the specific behavior of government intervention in enterprises mainly includes the behavior of government intervention in financing,employee policy,diversification,auditor appointment,investment decision-making,capacity removal and so on.This paper examines the impact of ownership on the destocking behavior of real estate enterprises on the basis of clarifying the motivation and ability of local governments to intervene in the destocking behavior of state-owned real estate enterprises.Empirical results show that state-owned real estate companies are less likely to destock than their non-state-owned counterparts because of government intervene.This paper provides empirical evidence that local governments intervene in the destocking behavior of state-owned real estate enterprises.It not only reveals the institutional causes of the high real estate inventory in China,but also adds new empirical evidence to the study of the economic consequences on government intervention under the weak institutional environment.Thirdly,it provides micro-level incremental evidence for the economic consequences of real estate destocking from the two aspects of excessive liabilities and corporate value.At present,the research on the economic consequences of real estate destocking are mostly focused on the macro-level,including housing prices,real estate investment,financial stability and economic growth.Therefore,there is a lack of micro-level using real estate enterprise data.This paper empirically studies the economic consequences of real estate enterprises' non-destocking from the perspectives of excessive debt and firm value.The results show that non-destocking behavior of real estate enterprises is accompanied by more excessive debt,and reduces the firm value.Therefore,the destocking and de-leverage of real estate enterprises can help the healthy development of the real estate industry.It not only enriches the micro-cognition of the real estate enterprises' destocking behavior,but also provides micro-level supporting evidence for orderly advancing the mission of destocking under the background of deepening the Supply-Side Structural Reform. |
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