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Abstract
Executive Summary. While the indirect real estate market has been growing in Mainland China, the issue of corporate governance has emerged as a key concern for investors, as a number of cases involving stock manipulation have been revealed in recent years. This study investigates the degree to which corporate governance structures might be affecting the link between direct and indirect real estate in Mainland China. Based on data from 1994 to 2008, it was found that Mainland-listed property companies had a weaker linkage between direct and indirect real estate than Hong Kong-listed property companies. Regulatory reforms in the Mainland stock markets have, however, tended to improve the linkage, as well as selection returns for Mainland-listed companies. These findings suggest that corporate governance structure is in fact priced, and that it should be an important factor when considering between direct and indirect real estate investment in the PRC.