Are Political Connections Corruption? Evidence from China's Primary Land Market

53 Pages Posted: 16 Apr 2021

See all articles by Ting Chen

Ting Chen

Hong Kong Baptist University - Department of Economics

Li Han

Hong Kong University of Science & Technology (HKUST) - School of Humanities and Social Science; Hong Kong University of Science & Technology (HKUST) - School of Science

James Kai-Sing Kung

Hong Kong University of Science & Technology (HKUST)

Jiaxin Xie

Jinan University - Institute for Economic and Social Research

Date Written: August 27, 2018

Abstract

Using transactions conducted by publicly listed firms in China’s primary land market during 2000-2012 as a case study, we confirm that political connections are essentially corruption. By constructing unique measures to partial out the key factors confounding political connections, namely managerial ability and informational advantage, we find that firms whose board directors are retired prefectural government officials paid 15.8-25.5% less for land than firms without such ties. As a counterfactual, such a discount is absent in the secondary land market where the local government is not the sole seller, and during unannounced anti-corruption audit campaigns.

Keywords: Corruption, Political connections, Primary Land market, Anti-corruption Campaigns, China.

JEL Classification: D73, P26, R52.

Suggested Citation

Chen, Ting and Han, Li and Kung, James Kai-Sing and Xie, Jiaxin, Are Political Connections Corruption? Evidence from China's Primary Land Market (August 27, 2018). Available at SSRN: https://ssrn.com/abstract=3822839 or http://dx.doi.org/10.2139/ssrn.3822839

Ting Chen (Contact Author)

Hong Kong Baptist University - Department of Economics ( email )

WLB 518, 34 Renfrew Road
Kowloon Tong
Hong Kong, Hong Kong NA
Hong Kong

Li Han

Hong Kong University of Science & Technology (HKUST) - School of Humanities and Social Science ( email )

Room 2338
Clear Water Bay
Kowloon
Hong Kong

Hong Kong University of Science & Technology (HKUST) - School of Science ( email )

Room 6515, 6/F, Lifts 25/26
Clear Water Bay
Kowloon
Hong Kong

James Kai-Sing Kung

Hong Kong University of Science & Technology (HKUST)

Clearwater Bay
Kowloon, 999999
Hong Kong

Jiaxin Xie

Jinan University - Institute for Economic and Social Research ( email )

601 West Whampoa Road
Tianhe District
Guangzhou, 510632
China

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