We investigate whether and how political connections penetrate through headquarter-subsidiary relationships. Our results show that even though the headquarters of politically connected listed firms pay comparable land prices as other firms, their subsidiaries pay 12.1-13.2% less. The price discount, driven by corruption, is exacerbated when the land is for commercial or residential use and is disposed of through informationally opaque supply methods. The anti-corruption campaign has successfully mitigated such price distortions. Our findings also show that better legal protection and private sector development are crucial for fair markets.

This paper studies the land market insider trading during the subway construction plan. The plotstation-level empirical evidence obtained by using the data of the land transactions from 2008 to 2016 in all Chinese cities with subway construction plans. The results show that the characteristics of subway plot insider trading are mainly reflected in the pricing priority (low asking price) and information priority (low bidding premium) of politically connected companies during the plan period. Further study shows that the plots obtained by insiders using pricing priority are mainly used

for people’s livelihood projects. The realization of the self-interests of both government officials and politically connected companies relies more on the use of concealed information priority.

This paper examines the relationship between kin-based clans and the state in the modern economy, exploring how clans can either cooperate with or capture the state. Using data from China’s primary land market and a nationwide genealogy dataset, we employ spatial matching to estimate clan’s causal impacts on land parcel prices, which are a crucial source of fiscal revenue for local government. We find that firms linked to local clans obtained 1.3%-3.0% lower prices than those without clanship connections. These discounts are driven by counties with stronger clan culture, clans with more genealogy books, and clans built before 1979. We show that clan-linked firms get lower prices due to their information advantage, collusion with auction participants, and spillover within home block/town. Furthermore, we find that a higher number of clan transactions is associated with reduced economic growth at the county level, primarily due to clan capture of the state. Political cadres provide rents to clans, as clans assist in accelerating urbanization, which is an essential promotion incentive for cadres. Our analysis shows that the corruption between clans and political cadres is evident, as clans with connections to county leaders receive larger discounts, and discounts increase when corrupt provincial/prefectural leaders are in office.