Golfing for Information: Informal Interactions and Economic Consequences

79 Pages Posted: 9 May 2019 Last revised: 30 Jun 2019

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Yu Qin

National University of Singapore (NUS) - Department of Real Estate

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate

Xiaoyu Zhang

National University of Singapore (NUS) - Department of Real Estate

Date Written: April 26, 2019

Abstract

This paper studies how company directors acquire information through informal interactions at golf courses to subsequently acquire land parcels at lower prices. Developers play golf together more often after the government makes a land sale announcement. The winning bids are 14% lower after interacting with other corporate directors, and the lower land prices allow the developers to sell new units 8% cheaper. However, the lower land prices by informed bidders generate negative spillovers on neighboring properties. Our results imply that the informal interactions enable developers to realize higher profits, while the government loses the land sale revenues.

Keywords: information efficiency, informal social interaction, winners’ curse, land auctions, corporate investment

JEL Classification: D71, D82, G31

Suggested Citation

Agarwal, Sumit and Qin, Yu and Sing, Tien Foo and zhang, xiaoyu, Golfing for Information: Informal Interactions and Economic Consequences (April 26, 2019). Available at SSRN: https://ssrn.com/abstract=3378404 or http://dx.doi.org/10.2139/ssrn.3378404

Sumit Agarwal (Contact Author)

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Yu Qin

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Xiaoyu Zhang

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

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