Real Estate Listed Companies Influential Factors Of Inefficient Investment Behavior

Since the reform of China’s real estate, real estate industry develops rapidly. It playsan important role on stimulating economic growth. How to improve macro control on realestate has become a national focus. This paper verifies the level of inefficient investmentof real estate listed companies in China, and the impact of total amount of loans fromfinancial institutions, loan rates and the supply of land on inefficient investment behaviorof real estate listed companies.We summarize and analyze the past research, and propose hypotheses on the bases ofthe relevant economic theory and reality. We use the annual data of domestic listed realestate companies from2003to2012as samples, the total loans of financial institutions,loan rates and land supply as explanatory variables, and use panel data by Richardson(2006) model. Firstly, we test the existence of inefficient investment behavior of realestate companies, and verify the correlation between inefficiency investment and free cashflow, then verify the overall impact of the total amount of loans from financial institutions,loan rates and land supply on inefficient investment of real estate companies. We groupthe sample according to the nature of property rights and do regression analysis separately,and finally we further group the sample according to the size of sample and do regressionagain. Our research has found that:(1) There are over-investment behaviors in China’s realestate listed companies, there are also under-investment problems, the overall performanceis under investment. The free cash flow has a significant positive correlation with overinvestment, and negatively correlated with under-investment;(2) The impact of totalcommercial loans, loan rates and land supply on over-investment behaviors of real estatelisted companies is not significant, but can play an effective regulatory role on theunder-investment behavior, and the impact of total loans is the largest, followed by loanrates, the impact of land supply is the minimum;(3)Total loans, loan rates and land supplyhave a more effective impact on under-investment of non-state-owned real estate enterprises, but their impact on over-investment behaviors of state-owned real estatecompanies or non-state-owned real estate companies are not significant;(4) Total loans,loan rates and land supply can significantly affect the under-investment behavior of smalland medium real estate enterprises, especially small and medium non-state-owned realestate companies. They have no significant impact on the under-investment behavior oflarge state-owned real estate enterprises, and only land supply can significantly affect theunder-investment of large non-state-owned enterprises. Only total loans and loan rates canaffect the over-investment behavior of large non-state-owned real estate companiessignificantly.