Abstract
Research has documented a significant difference in efficiency between state-owned enterprises (SOEs) and non-SOEs (e.g., Megginson and Netter, 2001). The main explanation for this difference is that SOEs have multiple objectives, and politicians’ control over SOEs enables them to meet their own political goals (Shleifer, 1998). Using a large international panel sample of SOEs, this study finds that SOEs make significant increases in corporate investment and employment during national election years. This pattern is particularly strong in countries with state-dominated banking systems. Taken together, this study provides strong evidence that politicians use SOEs to achieve their political goals.
Published Version
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