Love Conditionally: The Ownership Structure and Bribery Behavior of Chinese Firms

This paper studies empirically the determinants of firm bribery activities from the perspective of ownership structure. Using data on Chinese firms obtained from the Enterprise Surveys conducted by the World Bank, we compare the bribery activities of firms with various forms of ownership. We find that compared with private and foreign firms, state‐owned firms in China are not only more likely to receive bribe requests from government officials, but are also more likely to pay bribes. Meanwhile, firms are more likely to bribe if they are extorted, or if they expect to reduce infrastructural obstacles to their business operations. Other factors such as manager experience and external audits also exhibit significant influence upon firms’ bribery decisions.