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Article: What Drives Fixed Asset Holding and Risk- Adjusted Performance of Corporates in China? An Empirical Analysis Author: Yan Dong, Charles Ka Yui Leung, Dongliang Cai Start Page: 141 Abstract: This paper attempts to shed light on the over-investment debate by investigating listed firms in China. Firms with a higher level of fixed asset holding and overhead expenses, and covered by preferential tax policies in China are found to be associated with lower risk-adjusted performance. In addition, the preferential tax policies encourage fixed asset investment. In contrast to some of the previous literature, state-ownership of firms, dividend policies, and ownership concentration are not robust predictors of risk-adjusted performance, and debt level, managerial shareholding, and profit per unit of asset are not robust predictors of fixed asset investments. Keywords Fixed asset holding; Corporate real estate; Over-investment theory; State-ownership; Tax-favor policy
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