Local Government Rent-seeking,Corporate Political Connections And The Control Structure Of Chinese Private Firms

China's current economy and society are in transition and local government rent-seeking behavior is the result of local public power on market intervention.The lack of formal system,excessive government intervention,and excessive corporate tax and other factors are to promote the family control as the leading form of private corporates through the search for political connections and other informal alternative mechanisms to make up for negative impacts because of the lack of formal system.Therefore,it is worth exploring the local government rent-seeking behavior to carry out a comprehensive and systematic analysis,the motives of the establishment of political connections in private corporates,and the influence between local government rent-seeking and the political connections of private corporates on the concentration of control.Based on the theory of rent-seeking theory,this paper studies the relationship between local government rent-seeking,political connections and control structure of private corporates from the definition of "non-direct productive activities" of rent-seeking.This paper analyzes the correlation between local government rent-seeking and political connections from private corporates,the relationship between rent-seeking and control structure of local government,and analyzes the relationship between local government rent-seeking and private enterprise's political association,And the mediating effect of political connections in the influence of rent-seeking on the concentration of control.The results show that the incentive mechanism of the establishment of political connections and centralized control structure is the rent-seeking,and the local government rent-seeking stimulates the establishment of the political connections of private corporates and selects the centralized control structure.The conclusions are as follows:(1)Rent-seeking has a significant positive correlation with the political connection of private corporates.(2)Rent-seeking has a significant positive correlation with the control structure of private corporates,and the local government rent-seeking incentive is more and more relevant.Rent-seeking can help corporates to establish political relations,political connections is the enterprise to the government rent-seeking a result;(3)The mediating effect of political connections on rent-seeking and control structure is not significant.The political connections have no obvious effect on the rent-seeking and control structure.However,the rent-seeking by local governments has triggered the establishment of political connections between private enterprises and the rent-seeking by local governments has helped to centralize the control structure of enterprises,and the political relationship established through rent-seeking has no significant impact on the concentration of control.