Media Coverage,Rent-seeking And Government Subsidies

The existence of economic decentralization and political centralization give the local governors more incentives to intervene companies.The most effective and direct way is government subsidies.The lack of law and formal system,however,change the distrbution of government subsidies to the competition of relationships between government and corporations.The rent-seeking activities to found and keep the political connection,at the same time,is more common in private companies due to disadvantages under the different nature of ultimate control.But because of the non-market characteristics,rent-seeking process causes different drawbacks such as the interference of the distribution process of government subsidies,the ineffectiveness of public resources and harm to companies themselves.As an important informal system,media is thought as a complementary tool to the formal system.And based on it,the media should also have a same influence as the formal system on rent-seeking and government subsidies.But there is no related study considering the role of media on these two areas.And this is how this study idea different from others.As for the analysis of theories,this study analyses the backgrounds and test the relationship between government subsidies and rent-seeking activities.What's more,this study also discusses the effects of government subsidies coming from rent-seeking on companies and the media position inrelationship above.This study chooses total A-share private listed companies from 2007 to 2015 as samples and conclude that:(1)The rent-seeking activities of private companies can help them get government subsidies;(2)Media coverage can reduce the subsidies obtained by rent-seeking activities;(3)Subsidies obtained by rent-seeking activities will decrease the firm value,especially in thelong-run,when rent-seeking contains more aggressive factors.However,when the aim of rent-seeking activities is just to show more information transformation other than the aggressiveness,the subsidies from rent-seeking does not destroy firms' value;(4)The media mitigate the negative impact of subsidies from aggressive rent-seeking on firms' value but it does not show the increase of positive effects of subsidies from non-aggressive rent-seekingon firms' value.The results remain robust when the range of government subsidies change,the proxy of rent-seeking adjusted and the sample adjusted.