IDEAS home Printed from https://ideas.repec.org/a/taf/rjerxx/v13y1997i3p273-295.html
   My bibliography  Save this article

Corporate Real Estate Holdings and the Value of the Firm in Korea

Author

Listed:
  • Kiwoong Cheong
  • Chi Kim

Abstract

This study investigates the relationship between changes in real estate prices and the value of firms. The main hypothesis is that changes in the value of firms caused by expectations of increasing real estate prices will be smaller in magnitude than these in the value of their real estate holdings since there will be a loss in the value of the firm occasioned by the perception of future growth opportunities forgone. The secondary hypothesis is that the loss in value caused by growth opportunities forgone will be proportional to the amount of debt financing used.The findings using a yearly cross-sectional test during 1987-91 indicate that the proportion of a firm’s real estate holdings to its total assets had no significant effect upon the return-on-investment in its stocks. However, the higher the debt ratio of the firm, the lower the coefficient of the real estate holdings, implying that the value loss of the growth opportunities forgone becomes larger as the firm uses more debt. Also these results are not observed in size analysis. Accordingly, a debt effect is regarded to be clearer than a size effect in the impact upon stock returns of the real estate holdings.

Suggested Citation

  • Kiwoong Cheong & Chi Kim, 1997. "Corporate Real Estate Holdings and the Value of the Firm in Korea," Journal of Real Estate Research, Taylor & Francis Journals, vol. 13(3), pages 273-295, January.
    • Handle: RePEc:taf:rjerxx:v:13:y:1997:i:3:p:273-295
    DOI: 10.1080/10835547.1997.12090883
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10835547.1997.12090883
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10835547.1997.12090883?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rjerxx:v:13:y:1997:i:3:p:273-295. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rjer20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.