Winner's Curse or Signaling? Bidding Outcomes in the Chinese Land Market

Liu, X. & Qu, W., 2015, In : International Real Estate Review. 18, 1, p. 113-129 17 p.

Research output: Contribution to journalArticleAcademicpeer-review

Since its liberalization in 2003, the urban land lease market in China has experienced substantial growth in terms of both the volume and value of transactions. At the same time, significant transaction premiums are observed in these land transactions; these premiums make the general public skeptical about the emergence of a property market bubble that stems from aggressive bidding in the land market. In this paper, we seek to rationalize this phenomenon by means of the event study method. By using a land transaction dataset from Beijing for the period 2003 to 2013, we find that the capital market reacts significantly to land bidding events. In addition, the land transaction premium observed in the Chinese land market can be explained by the signaling effect, in that developers tend to use the bidding price as a signaling device to disseminate favorable private information to the marketplace.

Original languageEnglish
Pages (from-to)113-129
Number of pages17
JournalInternational Real Estate Review
Issue number1
Publication statusPublished - 2015


  • Winner's Curse, Signaling, Land Transactions

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