Title

Competition in China's Real Estate Industry

Authors

Jiang Du, University of Rhode Island
Shaw K. Chen, University of Rhode IslandFollow
Jeffrey E. Jarrett, University of Rhode IslandFollow

Document Type

Article

Date of Original Version

2013

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.

Citation/Publisher Attribution

Du, J., Chen, S. K., & Jarrett, J. E. (2013). The Relationship Between the Intensity of Competition in China's Real Estate Industry and its Return on Equity. Journal of Asia-Pacific Business, 15(4), 324-334.

Available at: http://dx.doi.org/10.1080/10599231.2014.965961