High-quality development and exploration of a new development model for the real estate industry has recently attracted considerable attention. Scale expansion and relevant land-buying are essential components of the development model. Much of the literature investigating land-buying behaviors of real estate firms has focused on the number of lands bought rather than the number of cities entered, which is also an important aspect. Besides buying lands, listed real estate firms must concern the market value management related to financing and investors' valuation. Therefore, this paper investigates the relationship between the land-buying behaviors of listed real estate firms and their capital market performance. Investors can build more efficient stock portfolios and real estate firms can improve land-buying strategies based on the results.

We employed regression analysis to estimate the influence of land-buying behaviors on the capital market performance of A-listed real estate firms. The data was primarily obtained from the CREIS and CSMAR databases, spanning from 2009 to 2021 and involving 87 firms. The model included the number of lands bought, cities entered, and other aspects of land-buying behaviors. Capital market performance was divided into two aspects: firm investment value and firm risk, which are represented using Tobin's Q and Beta coefficients, respectively. The model also controlled firm and manager characteristics, financial ratios, and market environment and employed the two-way fixed effect ordinary least squares (OLS) method. The heterogeneity effect on ownership, firm scale, and year of listing was explored using a regression on the subsample, while robustness testing was conducted by handling extreme values. Finally, we discussed a potential channel through which land-buying behaviors affected the capital market performance.

The results show an inverted U-shaped relation between the firm investment value and number of cities entered; furthermore, the investment value increases when more cities are entered within a certain range throughout the study period. In the market downturn period, i.e., since 2017, the lifting effect due to entering more cities on the firm investment value has decreased, while that on firm risk has increased. Comparatively, the effect of the number of lands bought on capital market performance is not as important as that of the number of cities entered. The capital market performance of non-state-owned, smaller, or shorter-listed real estate firms is more affected by their land-buying behaviors. The impact of land-buying behaviors on capital market performance passes through the land-buying expense and sale revenue ratio channel.

The findings indicate a change in the reaction of the capital market to the regional expansion of land-buying. We recommend that real estate firms respond to feedback from the capital market and adjust their land-buying strategies in time, especially when selecting and entering more cities. Furthermore, investors should pay attention to region-focused real estate firms. The findings also suggest that the government should be cautious about structural changes in the real estate market, and a shift from focusing on the investment demand of real estate firms to focusing on the end-use demand of space is required to coordinate and guide the further improvement of the development model.

The land market plays a key role in achieving a stable and healthy market for real estate development and has a significant impact on macroeconomic conditions, government finances, and overall financial stability. However, many participants in the Chinese land market engage in blind expansion and irrational land acquisition, which interferes with achieving policy objectives such as price stability for land and housing, as well as the healthy development of the land market. This study analyzes market feedback of land auction participants and the factors influencing them. We use auction theory to examine the existence of the winner's curse phenomenon in the Beijing land market and provide policy recommendations for the government to regulate the land market.

This study is based on micro-level auction data from land sales in Beijing between 2013 and 2018 and from the Wind enterprise database. We first construct models to calculate cumulative abnormal returns for the auction participants' stock prices in the periods following land auctions. We then use an event study to explore the effects of participant, land, and auction characteristics on stock price changes. Particular attention is given to market feedback on the auction winners. The uniqueness of this study lies in the vast amount of data used. We consider factors that are crucial elements of market feedback but have been relatively unexplored in previous studies, such as participants' bidding premiums, past experiences in land auctions, and joint bidding.

We find that: (1) The higher the final bidding premium of land auction participants, the more negative the market's reaction. Previous experience with repeated bidding and joint bidding enables participants to access more market information, helping mitigate irrational bidding. Variables such as land value, bidding intensity, and the frequency of winning bids on a single day that reflect a bidder's economic strength lead to more positive market evaluations. (2) Evidence of the winner's curse phenomenon is observed in the Beijing land market. Although cumulative abnormal returns do not show significant inter-group differences between winners and losers, results of controlling for the final bidding premium reveal that higher bidding premiums result in more negative market evaluations for the winners. Joint bidding helps winners to make rational bids, but the effect of repeated participation in the short term is not significant. (3) The market holds a significantly negative view of bidders who are active over an extended period, and this effect is more pronounced for the winners, providing additional evidence for the existence of the winner's curse phenomenon.

Based on these findings, we recommend the government to enact policies to encourage market participants to make rational bids. This could be achieved by promoting complementary advantages and sharing market information through joint bidding to some extent. The government should also enhance information disclosure through various means to alleviate information asymmetry in the market and strengthen supervision of active market participants' funds and the development and construction processes to reduce irrational bidding behavior.