ASSOCIATION BETWEEN STATE OWNERSHIP PARTICIPATION AND RENT-SEEKING BEHAVIOR OF PRIVATE FIRMS IN CHINA

Abstract

The rent-seeking behavior of firms in economic society destroys the fair market order and hinders the sustainable development of the economy. In the context of the mixed-ownership reform, this study examines whether and how state ownership participation affects the rent-seeking behavior of private firms using Chinese-listed private firms from 2010 to 2019. The findings suggest that state ownership participation significantly eliminates the rent-seeking behavior of private firms. However, the eliminating effect of state ownership participation on private firms’ rent-seeking behavior is weakened by high economic policy uncertainty and government intervention where private firms operate. The findings of this study enrich the characteristics and influencing factors of rent-seeking behavior of private firms, expand the literature on Chinese mixed-ownership participation, provide empirical evidence that is inconsistent with Western theoretical predictions, construct a new theory based on practices with Chinese characteristics and further reveal the characteristics of Chinese accounting practices.