Eat-Drink, Corruption and Firm’s Purchase Order
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| Title | Eat-Drink, Corruption and Firm’s Purchase Order
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| Author | Huang Jiuli and Li Kunwang |
| Organization | NanKai University |
| Email | jlhuang@nankai.edu.cn; |
| Key Words | Entertaining Expenditure; Corruption; Purchase Order; Transitional Economy |
| Abstract | In transitional economy where fair competition lacks, corruption behaviors such as bribery may help resource allocation which does benefit to firms. With the data of World Bank survey with regard to 12400 Chinese firms in 2004, we investigate the relationship between firm’s corruption and its sales behavior, in which corruption activities are represented approximately by entertaining expenditure. We confirm that entertaining expenditure is surely used by firms as means of malfeasant competition because of the fact that the more entertaining expenditure per capita, the more probable it earns the purchase orders from government and the state owned enterprises. We exclude the possibility of conclusion derived from investment in normal relation capital by regressing firm’s customized production on entertaining expenditure as the counter-example, and further control for the problem of endogeneity by instrumental variable estimation. Our study implies that strengthening supervision and transparency over procurement of government and the SOEs can help to build a fair and orderly business environment. |
| Serial Number | WP389 |
| Time | 2012-12-07 |
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