Bribery by privately owned firms: an ownership origin perspective

Many privately owned firms in emerging economies trace the origin of their property rights to the privatisation of state-owned enterprises. Using a dataset containing over 2000 Chinese private firms, this study examines how origin of property rights of Chinese privately owned firms affects their bribery decisions. By measuring corporate bribery through entertainment expenses, I find that private firms that have transitioned from state-owned enterprises (privatised firms) tend to pay more in bribes compared to newly established private enterprises initiated by individuals (de novo firms). Additionally, the impact of privatisation on bribery is moderated by the owners’ management philosophies. Specifically, a greater intention for family control of owners tends to weaken the positive effects of privatisation on corporate bribery.