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How corporate rent-seeking affects outward FDI——Empirical evidence based on A-share listed manufacturing companies

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  • Bi, Wenjing
  • Li, Jiansheng
  • Xu, Weiyin
  • Zhang, Xiaotao

Abstract

This study examines the theoretical mechanism of corporate rent-seeking's influence on enterprises' Outward Foreign Direct Investment (OFDI) behavior and empirically tests its impact on OFDI. The results show that corporate rent-seeking increases OFDI significantly. This conclusion is still valid after employing a series of robust analyses. The channel mechanics test finds that corporate rent-seeking reduces enterprise profitability and thereby induces OFDI. Heterogeneity tests find that these effects exist mainly among private enterprise and enterprise without political connection. Our findings enrich the literature on the determinants of OFDI and complement the research on the motivation of internationalization in emerging market countries.

Suggested Citation

  • Bi, Wenjing & Li, Jiansheng & Xu, Weiyin & Zhang, Xiaotao, 2023. "How corporate rent-seeking affects outward FDI——Empirical evidence based on A-share listed manufacturing companies," Finance Research Letters, Elsevier, vol. 58(PA).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323006384
    DOI: 10.1016/j.frl.2023.104266
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    Cited by:

    1. Zheng, Xiaxuan & Chen, Yueyan, 2024. "Does supply-chain-finance help to improve the efficiency of outward foreign direct investment?," Finance Research Letters, Elsevier, vol. 59(C).
    2. Wang, Deli & Shi, Yaya & Li, Qian, 2024. "The effect of digitalized tax administration on stock price crash risk: A natural experiment in China," Research in International Business and Finance, Elsevier, vol. 69(C).

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