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postgraduate thesis: The impact of corporate diversification and cash holdings on the performance of real estate companies : empirical evidence from Hong Kong

TitleThe impact of corporate diversification and cash holdings on the performance of real estate companies : empirical evidence from Hong Kong
Authors
Advisors
Advisor(s):Chau, KW
Issue Date2013
PublisherThe University of Hong Kong (Pokfulam, Hong Kong)
Citation
Lai, C. [賴志釗]. (2013). The impact of corporate diversification and cash holdings on the performance of real estate companies : empirical evidence from Hong Kong. (Thesis). University of Hong Kong, Pokfulam, Hong Kong SAR. Retrieved from http://dx.doi.org/10.5353/th_b5153690
AbstractCorporate diversification has received much attention from academics and management practitioners for over 30 years. Major work has been dedicated to determining if diversification creates or destroys a firm’s value across industries. This study examines the effect of corporate diversification on firm performance using a relatively homogenous sample of 70 publicly listed real estate companies in Hong Kong. Previous studies on the diversification of real estate companies or REITs mainly focused on diversification within real estate holdings across countries or asset types. This study contributes to the literature by examining real estate companies diversifying into other industries and assessing their performance from 2005 through 2010. The empirical findings indicated that Hong Kong real estate firms that chose to diversify into other industries performed better than those solely focused in real estate. Since the decision to diversify may be endogenous, the author used a number of estimation procedures to control for potential endogeneity. The results were robust in that the diversification effect remained positive and significant. Another contribution of this thesis is that it examined the impact of cash holdings on firm value and analyzed the value of cash for real estate companies and how corporate diversification affects the level of cash holdings. The author found that firms with larger cash reserves experienced decreases in their value. This result was consistent with the agency costs of free cash flows in that greater shareholder rights are associated with lower cash holdings. In addition, the author found that diversified firms hold less cash than their focused competitors. The findings supported the prediction of the internal capital market hypothesis that diversified firms are more efficient in allocating resources through internal capital markets and, therefore, reduce their need for large cash holdings.
DegreeDoctor of Philosophy
SubjectReal estate business - China - Finance
Diversification in industry - China - Hong Kong
Dept/ProgramReal Estate and Construction
Persistent Identifierhttp://hdl.handle.net/10722/195982

 

DC FieldValueLanguage
dc.contributor.advisorChau, KW-
dc.contributor.authorLai, Chi-chiu-
dc.contributor.author賴志釗-
dc.date.accessioned2014-03-21T03:50:03Z-
dc.date.available2014-03-21T03:50:03Z-
dc.date.issued2013-
dc.identifier.citationLai, C. [賴志釗]. (2013). The impact of corporate diversification and cash holdings on the performance of real estate companies : empirical evidence from Hong Kong. (Thesis). University of Hong Kong, Pokfulam, Hong Kong SAR. Retrieved from http://dx.doi.org/10.5353/th_b5153690-
dc.identifier.urihttp://hdl.handle.net/10722/195982-
dc.description.abstractCorporate diversification has received much attention from academics and management practitioners for over 30 years. Major work has been dedicated to determining if diversification creates or destroys a firm’s value across industries. This study examines the effect of corporate diversification on firm performance using a relatively homogenous sample of 70 publicly listed real estate companies in Hong Kong. Previous studies on the diversification of real estate companies or REITs mainly focused on diversification within real estate holdings across countries or asset types. This study contributes to the literature by examining real estate companies diversifying into other industries and assessing their performance from 2005 through 2010. The empirical findings indicated that Hong Kong real estate firms that chose to diversify into other industries performed better than those solely focused in real estate. Since the decision to diversify may be endogenous, the author used a number of estimation procedures to control for potential endogeneity. The results were robust in that the diversification effect remained positive and significant. Another contribution of this thesis is that it examined the impact of cash holdings on firm value and analyzed the value of cash for real estate companies and how corporate diversification affects the level of cash holdings. The author found that firms with larger cash reserves experienced decreases in their value. This result was consistent with the agency costs of free cash flows in that greater shareholder rights are associated with lower cash holdings. In addition, the author found that diversified firms hold less cash than their focused competitors. The findings supported the prediction of the internal capital market hypothesis that diversified firms are more efficient in allocating resources through internal capital markets and, therefore, reduce their need for large cash holdings.-
dc.languageeng-
dc.publisherThe University of Hong Kong (Pokfulam, Hong Kong)-
dc.relation.ispartofHKU Theses Online (HKUTO)-
dc.rightsThe author retains all proprietary rights, (such as patent rights) and the right to use in future works.-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subject.lcshReal estate business - China - Finance-
dc.subject.lcshDiversification in industry - China - Hong Kong-
dc.titleThe impact of corporate diversification and cash holdings on the performance of real estate companies : empirical evidence from Hong Kong-
dc.typePG_Thesis-
dc.identifier.hkulb5153690-
dc.description.thesisnameDoctor of Philosophy-
dc.description.thesislevelDoctoral-
dc.description.thesisdisciplineReal Estate and Construction-
dc.description.naturepublished_or_final_version-
dc.identifier.doi10.5353/th_b5153690-

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