Effects of Institutional Environment on Location Choice of Real Estate Companies' Inter regional Investment

Abstract

Abstract:

By analyzing the performance of China's A-share listed real estate companies after their first entry into different provinces in China during the period from 2004 to 2015, this paper studies the effects of institutional environment on the location choices of companies. The empirical results indicate that the better the institutional environment of a target location is, the more likely the location is chosen. The bigger the institutional distance between target area and companies' register area is, the less likely the area is chosen. What's more, companies are willing to enter areas with institutional environment stronger than their register area and reluctant to enter the areas with institutional environment weaker than their register area. Furthermore, as to companies registered in areas of strong institution that entered areas of weaker institution, the restraining effect of institutional distance on the location choice is significant. But for companies registered in areas of weaker institution that entered areas of stronger institution, the effect of institutional distance on the location choice is not significant. By further analysis, we find that political connection and relevant investment experience moderate the relationship of institutional environment, institutional distance and location choice. These two factors can both reduce the inhibiting effect of the institutional environment on the entry choice and stimulate investment.

Key words: institutional environment, institutional distance, real estate, inter-regional investment, location choice

Yang Yan, Li Panpan, Mao Yuhui. Effects of Institutional Environment on Location Choice of Real Estate Companies' Inter regional Investment[J]. , 2018, 30(11): 186-197.

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