How revolving-door recruitment makes firms stand out in land market: Evidence from China

The fact that firms seek political connections through revolving-door recruitment is widely acknowledged around the world. Using an original database including the information of listed firms' board members and parcel-level land transaction records, this paper documents how revolving-door recruitment makes firms stand out in China's land market. We show that firms with revolving-door recruitment receive special deals in land transactions, which are simultaneously reflected in the quantity and price of land. Specifically, connected firms buy more parcels and larger areas of land in the primary land market. Due to the particularity of industrial land, price discounts are only identified for commercial and residential land, while not for industrial land. Measuring economic activity by night light intensity, we find no evidence that land transaction under the influence of political connections has a negative impact on economic activity on land. Our research advances the understanding that the state-business relationship is an essential factor in resource allocation in an emerging market with government intervention.