Due to economic development as well as accelerated urbanization, China's real estate industry has witnessed huge progress in recent years. Meanwhile, because of the scarcity and immovability of land which constitutes the major "material" for producing real estate property, new regional markets should be explored for a real estate company's growth, thus real estate companies have more incentive to conduct trans-regional development. What's more, the current land transfer system reform also facilitates companies' trans-regional expansion. In such a context, in order to spread risks and explore new markets, more and more companies choose to enter different kinds of regions which have different economic situations and different real estate market conditions. While such a trans-regional expansion can neutralize some risks and provide new market opportunity, entering new regions always incurs new transition costs, indicating the effects that trans-regional development brought for a real estate company might be mixed.Then, the questions are through which ways trans-regional expansion can influence a company's performance? And what is the overall effect? In order to answer these questions, this paper firstly tries to generalize the mechanism through which trans-regional development exert influence on companies' performance by reviewing portfolio theory, then based on such a mechanism, analyzes the effects of trans-regional expansion in the context of the different characteristics of each segmented regional market. What's more, apart from theoretical analysis, this paper also employs empirical study by using the panel data of listing real estate companies in China from 2004 to 2006. And the major conclusion is: the overall effect that trans-regional expansion brings about on real estate companies' performance is positive. |