This paper examines the relationship between investment decision making and firm competitive advantages. Using land investment data made by Chinese real estate developing firms between 2005 and 2015, the paper shows that the puzzle of firm’s investment activities are significantly related to the firm’s competitive advantages as measured by the firm’s value of assets in place to its market value ratio (Ohlson, 1995). Firms with competitive advantages and especially those from the large cities with high intangible growth options are less distance constrained in their investments than firms without these intangible attributes. Moreover, these firm’s investment announcements are positively affirmed in the stock market.
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