Bite-Sized Insights

Ever wondered how land deals and corporate board appointments are connected in China? This study reveals a pattern of “revolving-door” exchanges between local officials and firms. By analysing land transactions and board directors’ resumes, it shows that officials who sold land at discounted prices to firms often landed lucrative board positions after retirement. These officials were three times more likely to become directors, earning higher salaries and more company shares than their peers.

The study also highlights how less transparent land sales allowed officials to sell more land for profitable uses like commercial and residential construction. When audits prevented these discounts, the chances of officials getting board jobs and extra compensation dropped sharply but returned afterward. This mechanism shows the revolving door as a “payment” system rather than just a “connection” in China, offering unique insights into corporate governance dynamics.

What does this reveal about corporate governance in China?

#CorporateGovernance #LandTransactions #BoardAppointments #ChinaBusiness #RevolvingDoor