Document Type

Article

Date of Original Version

2013

DOI

10.1080/10599231.2014.965961

Abstract

Does the rate of return from the Chinese real estate industry correlate with the intensity of competition among real estate firms? If China’s equity market performs efficiently, the rates of return of real estate firms should vary indirectly with their level of monopoly power. Greater monopoly power reduces earnings risk and leads to lower costs of capital. We analyze empirical evidence and indicate no relationship exists between returns and competition. Speculation may induce stock prices to deviate from normal values. Since normal values assume no speculation, Chinese markets are not likely to be economically efficient.

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