The Impacts of Risk Attitude and Information Structure on Corporate Political Activity in Equipment Procurement: A Linear Contract Model

摘要

Corporate political activity (CPA) is an important factor in the principal-agent relationship between equipment firms and the military during highly administrative equipment procurement activities. Based on a linear contract model, we find a negative relationship between CPA supply and the degree of risk aversion of equipment firm, and an adverse supply of CPA with hidden information possessed by the military, making the equipment market would eventually disappeared.