State-owned enterprises and privatization in Turkey: Policy, performance and reform experience,1985-95

Naughton (2017) covers a lot of territory, with great authority, in what he modestly describes as a ‘preliminary appraisal’ of the current reforms of China's state enterprises. State owned enterprises (SOEs) are inherently difficult to analyze, even in the most transparent of societies, owing to the multiple, sometimes conflicting, objectives that governments impose on them. The key to understanding the Chinese reforms is in fact what Naughton terms the ‘impossible trinity’, as the government attempts to combine improved incentives, enhanced oversight, and new missions for its SOEs. Not surprisingly, therefore, Naughton concludes that the current wave of reforms, like those before them, is ‘deeply troubled’. Naughton's central theme is the multiplicity of reform objectives. These include three apparently core goals: corporatization of SOEs; their classification into ‘competitive’, ‘public service’ and ‘other’ categories; and strengthening the boards of directors. In addition, a further five objectives are mentioned, including managerial contracts, caps on managerial compensation, and the possibility of mixed ownership. In all countries where SOEs are present, these firms reflect the country's political history, especially in a country like China with its earlier phase of a centrally planned and controlled economy. The question is, what sort of role do they have in the transition from plan to market: do they exist mainly as vestiges of an earlier ideology, or as a vehicle for the Party to maintain its control over the economy (and associated rents), or for some broader developmental purpose? Naughton clearly illustrates the struggle, common to most countries with a sizeable SOE sector, to achieve a balance between commercial performance and political control. A sub-theme in Naughton is therefore the continuing search for a rationale for the SOEs, whether as sovereign wealth funds, technological innovators, development of ‘strategic sectors’, or broader developmental and equity goals. Naughton's Section 3 summarizes the key features of the SOE sector. The story is more or less as expected. The state sector is a shrinking share of the economy. While it employs just 13.5% of the industrial labour force, its share of industrial assets is more than double this figure. In other words, its operations are much more capital-intensive than the private sector. It would be interesting to know more about the services sector, especially finance and transport where the state presence in formerly communist economies is typically large. Naughton notes that there are significant, often opaque, entry barriers in these sectors. Moreover, being mostly non-tradables, there is not the discipline of import competition. We also get a picture of SOE performance from Naughton's Figure 3. The main conclusion here is that industrial SOEs have a rate of return on assets that is quite similar to, and appears to track, that of private firms. Given the constraints under which SOE's operate, this might appear surprising. But evaluating SOE performance on the basis of published financial data is inevitably highly problematic, as Naughton notes. There is typically a myriad of implicit (and sometimes explicit) subsidies and exactions and thus these comparisons can conceal as much as they reveal. Shifting from the positive to the normative, in a second-best world the major elements of an SOE reform package are typically transparency, hard-budget constraints and competition. That is, the public needs to have a full picture of their finances (both direct and implicit). SOEs need to have clearly prescribed fiscal constraints. And SOEs need to be exposed to level-playing-field competition, unless there are very carefully defined (and regulated) public service and/or natural monopoly considerations that dictate otherwise. All three recommendations are advanced in various sections of Naugton's paper. One paper cannot cover everything, especially such a vast and complex subject as this. Inevitably I have some additional queries. The first is situating the SOE sector in the broader Chinese economy. As the economy slows, and consumption becomes a more important driver, how will the role of SOE's evolve? Presumably, slower growth will increase the impetus for reform, as Naughton notes in passing. Second, how do SOE's connect to ongoing efforts to reform the financial sector, especially the ‘shadow’ banking sector? Presumably SOE's fund their businesses primarily through the formal, state-owned banking sector. It would be interesting to learn more about the relationship between non-financial SOEs and the SOB's – are the latter primarily a vehicle to underwrite the operations of the former? Moreover, connecting these two points, are SOE borrowings and leverage ever of such a scale that they could have the potential for macroeconomic destabilization? Third, what role do the SOE's play in the internationalization of the Chinese economy? Have they been major players in the outward orientation of Chinese firms? My impression is that they have been in a few sectors, such as natural resources and construction. Fourth, and related, what role do the SOE's play as technological spearheads and drivers of China's modernization? This is a common objective for SOE's in developing countries but, judging from the author's brief remarks (and other recent research, for example, Yip & McKern, 2016), China's SOE's appear to rarely perform this function.

No AccessOther papers9 Aug 2017Synthesis of Review of Corporate Governance of State-Owned Enterprises in Burkina Faso, Mali, and MauritaniaAuthors/Editors: Mazen Bouri, Francois Nankobogo, Rich FrederickMazen Bouri, Francois Nankobogo, Rich Frederickhttps://doi.org/10.1596/27603SectionsAboutPDF (1.2 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract: This synthesis paper is based on a review of three countries in West Africa-Burkina Faso, Mali, and Mauritania where state owned enterprises (SOEs) continue to play an important role and Governments have embarked on a number of public sector reforms are intended to have a positive impact on SOEs. SOE governance practices and problems are having strong similarities in all of the countries reviewed. These commonalities can be ascribed to the fact that all of the countries are transitioning from centrally controlled economic and political traditions to more liberal economies and to a more democratic government. All are facing challenges with implementing the legal structures left behind from colonial times. The data that is available shows that wholly-owned and state controlled SOEs under perform. Many are technically insolvent and survive only through government support. Their performance is not only poor in the financial area but also in the provision of needed social services. The country studies link the poor performance of SOEs, in particular wholly-owned SOEs, to their governance practices. Long-lasting reforms are not simply a matter of plugging holes in the legislative or institutional framework. Corporate governance is the result of a complex interplay of law, practice, institutions and culture. Action plans need to take into account incentives and the political, social and cultural context of corporate governance in the country in addition to the legal framework. Indeed, SOE governance is a system and making it work better requires a systems approach. Most reform plans in the past have focused on one or another element of SOE governance, which might explain why many have fallen short of hopes and expectations. Systems approaches, on the other hand, are important in complex organizations (such as SOEs) whose success depends upon the interaction and cooperation of other organizations and institutions. This synthesis paper presents the objectives and the methodology used in carrying out the reviews followed by a discussion of the features and importance of SOEs in each of the countries studied. It then segues into a discussion on the performance of SOEs which is supplemented by case studies of both successful and unsuccessful SOEs and key lessons learned the paper then presents the current Government initiatives for reform and the remaining challenges and recommendations. The paper concludes with suggestions on how to implement the recommendations based on examples from other countries that have embarked on comprehensive governance reforms for the SOE sector. Previous bookNext book FiguresreferencesRecommendeddetails View Published: July 2010 Copyright & Permissions Related RegionsAfricaRelated CountriesBurkina FasoMaliMauritaniaRelated TopicsFinance and Financial Sector DevelopmentGovernanceLaw and Development KeywordsACCOUNTABILITYACCOUNTINGAUDITSBANKRUPTCYCONFLICT OF INTERESTCONSENSUSCORPORATE GOVERNANCEDATA COLLECTIONDECISION MAKINGDEVELOPING COUNTRIESDISCLOSUREECONOMIC DEVELOPMENTEXCHANGE RATESFINANCIAL CRISISFINANCIAL INSTITUTIONSFRAUDGOOD GOVERNANCEINFORMAL SECTORINSOLVENCYINSURANCEINVESTMENT CLIMATEJUDICIARYLEGAL FRAMEWORKLEGAL REFORMLEGISLATIONLIBERALIZATIONMONOPOLIESNATURAL RESOURCESPOLITICAL ECONOMYPOLITICAL PARTIESPROFITABILITYPUBLIC HEALTHPUBLIC OPINIONPUBLIC POLICYPUBLIC SECTORREGULATORSSTATE-OWNED ENTERPRISESSTATISTICAL ANALYSISTRADE UNIONSTRANSPARENCYVESTED INTERESTSVOTING PDF DownloadLoading ...

Government subsidies have been used as a policy tool by many countries. Given the importance of government subsidies in the context of Chinese economy and state-owned enterprises (SOEs), this study seeks to understand the role played by government subsidies in the operating performance of Chinese SOEs. Using panel data on Chinese SOEs to construct the fixed-effects regression models, this study examines the effects of government subsidies and explores the moderating role of ownership structure in the correlation between government subsidies and operating performance of SOEs. Government subsidies have improved the operating performance of SOEs through easing financial constraints and stimulating research investment. However, high proportion of state-owned shares is not conducive to the positive effect of subsidies. The heterogeneous analyzes show, for SOEs located in eastern China, at the local level or with a higher R&D level, an increase in state-owned shares is more detrimental to the positive effect of subsidies on their performance. Tax-based-subsidies have significantly positive effect on the operating performance of SOEs, with the state-owned shares exerting a negative moderating effect on this positive correlation. Based on the empirical findings, we propose some policy suggestions for the mixed ownership reform of Chinese SOEs and reasonable allocation of government subsidies.

Manuscript TypeEmpiricalResearch Question/IssueThis study investigates the impact of elections on board member changes and its relationship with profit‐oriented performance of state‐owned enterprises (SOEs), thus providing new insights on political tie heterogeneity.Research Findings/InsightsUsing a unique hand‐collected dataset of 200 SOEs in six countries of the former Socialist Federal Republic of Yugoslavia (SFRY) from 2010 till 2014, we find that board member changes within SOEs, unlike for private enterprises, are politically motivated rather than performance induced. We reveal that SOEs with higher levels of board member changes encounter lower productivity and profitability levels. These findings suggest that political interference via board member changes causes organizational inefficiencies and poor SOE performance. Moreover, the results show that board member changes are insignificant for the performance of large SOEs and SOEs governed by independent government body.Theoretical/Academic ImplicationsThis study reveals an indirect channel for political interference, thus contributing to a better understanding of political tie heterogeneity. Moreover, our study is the first to link political interference and performance of SOEs through introduction of election cycles into the board member changes–performance relationship.Practitioner/Policy ImplicationsThe results of this study provide insights for policymakers who are interested in enhancement of SOEs' performance. They suggest ways in which board appointment procedures should be altered as to be insulated from political interference. In addition, they show boards how they can lower the negative consequences of frequent board member changes.

The aim of this research is to examine the effect of real earnings manipulation (REM) on the performance of state-owned enterprises (SOEs) in Indonesia. This research was conducted at a state-owned company listed on the Indonesia Stock Exchange (IDX) in 2013-2017. Data obtained from financial reports and annual reports issued by IDX and the Web of each SOEs. Data also comes from the Indonesian Capital Market Directory. The research variables consist of a dependent variable, which is financial performance, and an independent variable that is REM. Financial performance is proxy by net profit margin (NPM) and returns on equity (ROE). Earnings manipulation is proxy by Roychowdhury's model. The type of ownership is used as a control variable of this research. Generally, the least square regression model is used to test the relationship between earnings manipulation and SOEs performance. This research shows that earnings manipulation based on real activities through production costs negatively affects the performance of Indonesian SOEs, government ownership negatively effects on NPM whereas public ownership has a positive effect on performance, as measured by ROE. Improper government policies can reduce the performance and significant disadvantages of SOEs.

After collecting the relevant literature on how the government audit impacts the performance of state-owned enterprises, this study compares the differences in the impact of government audit on the performance of state-owned enterprises in various regions and sizes, and collects 8090 data from a number of A-share listed state-owned enterprises for empirical analysis. According to the empirical results, government audits can promote the performance of state-owned enterprises, and such an influence is different in various regions and scales of state-owned enterprises. Further research shows that compared with the state-owned enterprises in the eastern region, the government audits can better promote the performance of the state-owned enterprises in the central and western regions. Compared with small-scale state-owned enterprises, government audits can better promote the performance of large-scale state-owned enterprises. Finally, this paper provides corresponding suggestions on how to conduct government audits in the central and western regions and small-scale state-owned enterprises.

State-owned enterprises (SOEs) play a strategic role in the Indonesian economy. In Indonesia, SOEs have contributed around 16.41% for the Indonesian state budget. Many Indonesian state-owned enterprises (SOEs) have listed their stocks on the Indonesia Stock Exchange. However, the study on the performance of SOEs’ stocks is still relatively limited and tends to use indicators such as Sharpe Index, Treynor Ratio or Jensen Index. In addition to using indicators such as Sharpe Index, Treynor Ratio or Jensen Index, this study examines the performance of SOEs’ stocks using Adjusted Sharpe Index, Adjusted Jensen Index and Sortino Ratio that can measure the downside risk of those stocks. The objective of this study is to analyze the performance of the SOEs’ stocks in Indonesia. The sample in this research were 19 SOEs’ stocks listed on Indonesia Stock Exchange during the period from January 2013 until April 2019. The result of this research indicated that INAF (PT Indo Farma) stocks had the best performance when measured by using all measurement methods. The performing stocks came from the construction sector and the pharmaceutical sector. Therefore, investors are suggested to give more attention to SOEs from the pharmaceutical sector and the construction sector.

The fundamental principles of “sustainable development” and “green” promoted by ESG align with the concept of “green and sustainable” development. Enhancing enterprise ESG is a methodical endeavor that necessitates enterprises to possess ESG investment capabilities, coordinate many stakeholders, and leverage the influence of prominent market players. State-owned enterprises (SOEs) possess a specific level of support within a nation’s economy. SOEs serve as a fundamental pillar of China’s socialist economic system with distinctive characteristics, significantly influencing business conduct and reinforcing corporate value orientation. Consequently, the capacity of SOEs to assume a strategic leadership role in enhancing supply chain ESG performance is of paramount importance for the general elevation of ESG standards among Chinese enterprises. Limited research has investigated the transmission effect of the ESG performance among chain enterprises from a supply chain viewpoint, particularly regarding the pivotal role of SOEs in enhancing the ESG performance of these entities. This article examines the influence of SOEs’ ESG performance on the ESG performance of supply chain enterprises, focusing on the spillover effects of SOEs’ ESG performance within the supply chain context. It investigates how SOEs lead upstream and downstream enterprises in enhancing their ESG performance, aiming to address the existing cognitive gap in this area and provide substantial evidence for pertinent theories and practices. This article, employing an empirical research methodology, discovers that the ESG performance of state-owned supply chain core enterprises significantly enhances the ESG performance of enterprises in a supply chain, while non-state-owned supply chain core enterprises do not exhibit this effect. Furthermore, research indicates that this effect is asymmetric: when the supply chain core enterprise is a SOE and the enterprises in the supply chain are non-state-owned, the leading effect is more pronounced, and this effect is more powerful for upstream enterprises. The heterogeneity test reveals that the impact of the ESG performance is more pronounced in larger state-owned supply chain core enterprises that have been publicly listed for an extended duration and operate in highly competitive markets. The conclusions of this essay address the deficiencies of current research and provide significant practical implications for the development of green supply chains in the contemporary era.

PurposeCorporate governance (CG) is a mechanism for directing, administering and controlling organisations. CG has become a vital component in driving efficient operation of state-owned enterprises (SOEs). The purpose of this paper is to examine the relationship between CG practices and the performance of Thai SOEs.Design/methodology/approachThis research is quantitative in nature; data were collected through a questionnaire, which was distributed to a sample of 1,140 respondents from 38 Thai SOEs. Structural equation modelling was used for data analysis.FindingsThe results indicate that the board of directors has a direct negative influence on the performance of Thai SOEs. However, management systems play a significant role in mediating the relationship between boards of directors and the performance of Thai SOEs. Additionally, corporate governance practices should be implemented not only at the board-of-director level but also at all levels of operation throughout the organisation.Practical implicationsTo develop effective boards of directors, SOEs should be pushed to develop the appropriate strategic management systems (i.e. risk management, internal controls, internal audits, human resource management and information technology). These systems allow boards of directors to access and use important information that will help guide the business process, which leads to performance improvement in SOEs.Originality/valueThis empirical study investigates the relationships between CG practices and the performance of SOEs in the context of developing countries.

Promoting the transformation of the state‐owned assets supervision system (SASS) from ‘managing assets’ to ‘managing capital’ is the key direction of the new round of state‐owned assets reform. This article takes the policy implementation of state‐owned capital investment and operation companies (‘two types of companies’) as a quasi‐natural experiment, selects Chinese A‐share listed state‐owned enterprises (SOEs) from 2009 to 2022 as the research sample, and investigates the impact of SASS reform on the performance of SOEs using a multi‐period difference‐in‐differences model. The results suggest that SASS reform can significantly improve the performance of SOEs. Mechanism analysis indicates that SASS reform enhances the performance of SOEs by weakening government intervention, increasing external pay gaps, and reducing agency costs. Heterogeneity analysis shows that SASS reform on the performance of SOEs is affected by the administrative levels, industry attributes, and external institutional environments. The performance‐enhancing effect of SASS reform is more significant in central SOEs, competitive SOEs, and SOEs with a better external institutional environment. The findings enrich the research on the economic consequences of SASS reform and the factors affecting the performance of SOEs, providing empirical evidence for deepening the reform of state‐owned capital and SOEs and promoting the high‐quality development of SOEs.

Unintended consequences of carbon regulation on the performance of SOEs in China: The role of technical efficiency

Getting state-owned enterprises to perform at optimum level and achieve the best for the country is the dream of every government. Unfortunately, even if digitization is one of the indisputable strategies for achieving such a vision, little has been done in most of the previous epistemological studies to discern how digitization would leverage the state-owned enterprises’ operational efficiency. Instead, a lot of studies have been more fascinated with the analysis of the management and performance of state-owned enterprises, as well as factors like mismanagement, financial mismanagement, and political interference that affect the effective performance of most state-owned enterprises in South Africa. In contrast, this study takes a different approach. Given the operational management problems and cost control issues that most state-owned enterprises experience in South Africa, it is such a question that this study sought to explore and solve if digitization can improve operational efficiency to lower costs and bolster the profitability and financial sustainability of state-owned enterprises. To achieve that, the study used a systematic review structured according to four steps encompassing the formulation of a systematic review question, literature search, data extraction and thematic analysis. As the world digitizes, findings indicated most state-owned enterprises to also embrace the use of the required 4IR digital technologies and infrastructure. But in that process of digitization, some of the state-owned enterprises were also found to experience impediments arising from unclear digital strategy, poor digital operations management, budgetary constraints and resistance to organisational change. Given such dynamics, it suggested that it is important that state-owned enterprises consider addressing such problems by introducing the appropriate digital strategy accompanied with the use of the appropriate change management and transformational leadership style.

Commercial State owned enterprises (CSOEs) in Kenya have recently recorded poor performance forcing the government to constantly bail them through exchequer funding. This has continued to put pressure on the country’s fiscal landscape. To reverse the negative trend, the government implemented business process re-engineering measures. However, to the best of my knowledge, there is no empirical evidence that supported the initiative. This study therefore sought to investigate the effect of business process re-engineering on performance of state-owned enterprises in Kenya. Descriptive survey style of research design was adopted for the study using questionnaire to obtain primary data. Primary data was drawn from a census sample size of 48 Commercial state-owned enterprises where the unit of analysis included two employees from each CSOE comprising of one manager and one head of departments involved in the transformational strategy initiation and implementation for at least the last five years. Out of the 96 questionnaires administered, 81 responses were received reflecting 84.4% response rate. Using Ordinary Least Square, the findings revealed that implementation of business process re-engineering led to an increase performance of Commercial state-owned enterprise by a factor of 0.755. The study concludes that a continuous improvement aimed at redesigning business process reengineering is enough to enhance performance in the state owned enterprise. The study therefore recommends that the state should fully implement Business Processes re-engineering strategy as a means of improving their overall performance of Commercial State-owned Enterprises in Kenya. Keywords: Business Process Reengineering, State owned Enterprises, Performance, Kenya

The empirical literature comparing the innovation performance of state‐owned enterprises (SOEs) and private firms in China often yields conflicting results. To shed new light on this debate, we construct an extensive dataset by linking the Annual Survey of Industrial Enterprises (ASIE) dataset with patent quality data. Our analysis focuses on the impact of privatization on the innovation performance of former SOEs. Our findings suggest that the privatization of SOEs generally results in a decrease in innovation performance. This adverse effect is particularly pronounced for firms situated in regions characterized by low levels of market development or those grappling with high financial constraints. This supports the hypothesis that SOEs can serve as a mechanism to address institutional deficiencies in China's context. Our study contributes to a deeper understanding of the relative innovation performance of SOEs and private enterprises and has significant policy implications for ongoing SOE reforms in China and other developing countries.

Research question This paper empirically examines the impact of corporate governance reforms on the financial performance of Indian state-owned enterprises (SOEs) for the period 2003–2011. Research findings/insights The findings indicate that the various corporate governance reforms collectively exhibited a statistically significant positive impact on performance when a difference in difference estimation process is used. However, the performance of SOEs is less than that of publicly listed companies, which is consistent with prior research. When the SOEs are compared with a matched pairing of publicly listed companies of similar size and same industry, their performance was comparable and in many instances superior. This is indicative of the regulatory constraints on competitors and preferential access to resources and markets given to the SOEs. As SOEs move towards a more mixed ownership model with more of them listed on the stock exchange and greater public ownership of shares the corporate governance issues will increase in importance. Theoretical/academic implications The controlled sell down of shares in SOEs presents a need for continuing governance reforms and ongoing research to track progress. Practitioner/policy implications The most striking observation from the study is that changes that were introduced as a corporate governance reform, such greater professionalism in boards, did not gain traction and enhance performance, rather the process of director selection and the concentrated bureaucratic and political interference stymied what was asserted to be conceptually sound reforms.