Hide it or let it be? A moral license perspective of the effect of state ownership on time-to-regulatory enforcement

Purpose This study aims to examine how state ownership affects the time-to-enforcement – the interval between the occurrence of corporate misconduct and its public disclosure by regulators. Drawing on moral licensing theory, this study argues that the legitimacy surplus conferred by state ownership weakens managers’ incentives to conceal market-related violations, thereby accelerating regulatory disclosure. Design/methodology/approach This study compiles a dataset of 2,397 enforcement actions involving 1,896 Chinese listed firms between 2011 and 2022. Using an event-history design and Cox proportional hazards models, this study examines the effect of state ownership on time-to-enforcement and test the moderating roles of government-initiated corporate social responsibility (CSR) engagement, ingroup misconduct, government affiliation and nonprofit interlocks. Findings Results show that higher state ownership significantly shortens the time-to-enforcement, consistent with a moral licensing mechanism. Government-initiated CSR amplifies this effect, while ingroup misconduct, central government affiliation and nonprofit interlocks weaken it. Additional analyses reveal a dual moral licensing effect: regulators adjust enforcement rigor based on their prior costly enforcement actions. This study also reveals that this acceleration effect is stronger for market-oriented violations than for policy-related ones. Originality/value The study reframes enforcement timing as an outcome of organizational concealment behavior rather than purely regulatory vigilance. It extends moral licensing theory from the individual to the organizational level by identifying legitimacy surplus as a key mechanism linking state ownership and disclosure dynamics. By integrating managerial and regulatory perspectives, the research advances understanding of how institutional legitimacy shapes the disclosure of corporate misconduct.