Governance Of State-owned Enterprises Research Articles

Comparing corporate governance practices of state-owned enterprises (SOEs) in South Africa and Singapore

Research aims: This paper undertakes a cross-country comparative analysis of corporate governance of state-owned enterprises (SOEs) in South Africa and Singapore, two countries using two different models for organising SOEs, with specific reference to agreement with the themes identified in the World Bank’s Framework for good Corporate Governance practices for SOEs. The aim of this paper is to identify differences and similarities in practice and to document how the states have fared using different models.Design/Methodology/Approach: The paper deploys a pragmatic mixed methods approach conducted in two phases, to understand the practices utilised by South African and Singaporean SOEs. The data emerging from these two phases, were compared to the Framework for good Corporate Governance practices for SOEs issued by the World Bank.Research findings: Findings suggest although South African SOEs have good corporate governance practices in place, Singaporean SOEs are better organised and governed compared with South African SOEsTheoretical contribution/Originality: This paper contributes to the scholarly discourse on SOEs in by expanding the discourse on public sector entrepreneurship and opening up new debates and research areas corporate governance of SOEs.

Will the Governance of Non-State Shareholders Inhibit Corporate Social Responsibility Performance? Evidence from the Mixed-Ownership Reform of China’s State-Owned Enterprises

Fulfilling social responsibilities in order to sustain development has increasingly become a strategic choice for companies. Good corporate governance can guarantee high corporate social responsibility performance. This paper selects state-owned enterprises listed on the Shanghai and Shenzhen A-Share market from 2013 to 2019 as samples and uses a panel data OLS regression model to empirically test the impact of the governance of non-state shareholders on the social responsibility performance of state-owned enterprises from two aspects of shareholding: structure and high-level governance. The results show that, first, the governance of non-state shareholders helps to improve the social responsibility performance of state-owned enterprises; second, that mechanism analysis indicates that non-state shareholders improve the social responsibility performance of state-owned enterprises by improving the internal control quality; and third, the impact of the governance of non-state shareholders on the social responsibility performance of state-owned enterprises is heterogeneous in three aspects: the degree of marketization, the level of product market competition, and the corporate profitability. This paper not only helps to clarify the factors which influence the social responsibility performance of state-owned enterprises, but also enriches studies on the economic consequences brought by non-state shareholders through participating in the governance of state-owned enterprises.

Convergence of corporate governance in state-owned enterprises: A case study in an emerging market using OECD Guidelines

This article investigates an under-researched area of government activity and corporate governance reform, namely, corporate governance in state-owned enterprises. State-owned enterprises (SOEs) form a significant part of the economy in many countries and particularly in Asia. This article contributes to the larger corporate governance convergence debate by investigating whether arrangements originally conceptualised in the private sector prior to going global have indeed gone global and extended into the public sector. The article approaches the problem by investigating three interrelated questions posed by Clarke (2011): whether convergence could occur, whether it is occurring and whether such convergence is a good thing. Using a combination of DiMaggio and Powell’s (1983) institutional framework, convergence theory and doctrinal methods, the article sets the Organisation for Economic Co-operation and Development (OECD) Guidelines on Corporate Governance of State-Owned Enterprises as a benchmark and assesses Philippine state-owned enterprise law and practices. The analysis revealed a high level of convergence. We find evidence that convergence was occurring by a series of high-level dialogues, that it was open and sufficiently non prescriptive to allow selective adoption and adaptation to local context. In evaluating the convergence, we believe that the benefit to the overall welfare of the Philippines outweighed the drawbacks

Principles of Corporate Governance of State-Owned Enterprises and its compliance in India

The article deals with the key points of the Guidelines on Corporate Governance for Central Public Sector Enterprises of India concerning the composition of a board of directors, audit, nominating and remuneration committees, subsidiaries. The author analyzes the level of compliance with these principles of 338 public sector enterprises, of which 255 were assessed by the Department of Public Enterprises and received grades from «poor» to «excellent». The article also discusses external and internal factors that may affect the level of compliance with the guidelines on corporate governance. Thus, the external factors include a big size of a company, experience, absence of major debt. The internal factors include reduction in a proportion of the State ownership, memorandums of understanding and the «ratna»-statuses. The last two factors were paid particular attention. The author concludes that the main obstacles to achieving desirable quality of corporate governance in the Indian central public sector enterprises are: (a) absence of ownership policy in public sector companies, defining the role and duties of the State as a shareholder, (b) accountability of public sector companies to many public authorities at the same time that almost negate corporate governance in its general understood sense, (c) the lack of operational and financial autonomy of a board of directors, (d) non-compliance with the number of independent directors and non-compliance with the requirements of the legislation and principle of corporate governance.

Corporate governance reform strategies for State-Owned Enterprises (SOEs): An integrated review of related literature

This review is centered on the corporate governance reform strategies for SOEs with a primary focus on Zimbabwean SOEs. The main objective of the review were to consider ways to enhance corporate governance practices by SOEs and corporate governance reform strategies adopted by SOEs. The authors also reviewed the literature on corporate governance of SOEs with the primary goal of identifying main strategies that may be used to reform SOEs that includes developing relevant corporate governance legislation. In fulfilling these objectives, authors used a qualitative literature analysis approach. The study reveals that corporate governance reform is necessary to rescue troubled SOEs who have been found under different situations of corporate governance malpractices. The authors recommended that in Zimbabwe there is a need for more SOEs corporate governance workshops. Researchers also laid out there is a need to carry out a further study on the effectiveness of corporate governance reform strategies being adopted by Zimbabwean SOEs that include the implementation of the PECG Act amongst other Acts of parliament that are meant to provide corporate governance of SOEs. Authors recommended that further studies on the corporate governance of SOEs would be most desirable as a way of addressing the pertinent problems currently bedevilling such SOEs in Zimbabwe.

Analysis of Government Policies in Structuring State Owned Corporation Through The Formation of Holding Companies

The legality of establishing a BUMN holding company is only based on Government Regulation Number 72 of 2016 concerning procedures for Equity Participation and Administration of State Capital in BUMN and Limited Liability Company, as an amendment to Government Regulation Number 44 of 2005 has not been fully comply with the principle of coherence with the above regulations namely Law Number 17 of 2003 concerning State Finance, Law Number 19 of 2003 concerning BUMN and Law Number 40 of 2007 concerning Limited Liability Companies. The purpose of this study is to find a concept of regulation and supervision the government on SOEs related to holding companies This research is normative with a statute approach and a conceptual approach. The results in this study are the need for legal reconstruction in BUMN where a law is needed that is central to regulate holding companies in Indonesia, where this law was born to provide related guidelines a mechanism for the formation, selection of the type of holding, and governance of State-Owned Enterprises in the form of Holding Company. The form of supervision on the implementation of BUMN holding in the future can be an integrated monitoring pattern is applied. In this supervision, 3 parties must be involved in a coordinated manner, namely the Parent Company Commissioner, the Supreme Audit Agency (BPK), and the Ministry of SOEs.

Corporate governance in state-owned enterprises. A systematic literature review: an international perspective

Abstract Background The state sector continues to play a significant role in the development of the global economy. Proper corporate governance is crucial to ensure the positive contribution of state-owned enterprises to the efficiency of the economy and its competitiveness. Despite the increasing importance of state-owned enterprises for the development of global gross domestic product and the quality of public services provided, research on corporate governance in state-owned enterprises is not widely represented in the world literature. Research aims This article provides a bibliographic analysis of the existing scientific work on corporate governance in state-owned enterprises. The aim of the analysis is to systematise the scientific output in this field, to demonstrate the scale of interest in this subject among researchers, and to indicate the predominant directions of research, taking into account their geographical origin. Methodology This study uses a systematic literature review. Findings The results of the research show that the existing scientific work in this field is insignificant in relation to the number of state-owned enterprises operating worldwide and their importance for the development of the global economy. Research by dominant research groups from the point of view of geography has shown that there is a clear variation in the dominant direction of research on corporate governance in state-owned enterprises, which is an indication of the different interests of researchers in different geographic areas. Analysing the factors underlying the differentiation just described could provide an incentive for further empirical research in this area.

Leading with Digital Technologies Governance in the State-Owned Enterprises

ABSTRACT By sharing novel research into the practical implications of large-scale digital records, this study aims to analyze the advanced impact of protective digital technologies strategies on state-owned enterprise governance. The study used panel data fixed effect regression model for analyzing the advanced impact of protective data strategies on digital-risk governance. Furthermore, to analyze the persistence of digital-risk and address the endogeneity concern, a dynamic panel model is used, and the results are estimated using GMM technique. This study shows that the protective data strategies are helpful in reducing digital-risk and therefore state-owned enterprises can reduce their digital-risk exposure by adopting innovative record practices. To the best of the author’s knowledge no prior study analyzes the impact of protective data strategies on the digital-risk governance. Therefore, the current research provides a significant contribution in the enterprise information literature regarding digital records and digital-risk governance.

Deepening Not Departure: Xi Jinping's Governance of China's State-owned Economy

AbstractTo what extent has governance of China's state-owned economy changed under Xi Jinping? Against the background of momentous shifts in the political arena since 2012, some observe a decisive departure in Xi's approach to managing state-owned enterprises (SOEs): towards tight centralized control by the Chinese Communist Party and away from gradual marketization. Analysing the main aims and methods of SOE governance over the last two decades, we find that SOE policy under Xi exhibits a deepening of pre-existing trends rather than a departure. First, the essential vision of SOE functions articulated under Xi is strikingly consistent with that of his predecessors. Second, his administration's approach to governing SOEs is not novel; it relies on established mechanisms of bureaucratic design, the cadre management system, Party organizations and campaigns. While Xi has amplified Party-centred tools of command and control, this appears to be an incremental rather than a radical shift in approach.

Project Governance in State-Owned Enterprises: The Case of Major Public Projects’ Governance Arrangements and Quality Assurance Schemes

Societal development is increasingly undertaken as major public projects in different sectors. Project governance is important for strategically successful outcomes; thus, a broad societal perspective should be kept throughout the governance process. State ownership exists in many forms, and major public projects’ governance arrangements differ. Quality assurance is a recommended part of the arrangements, yet knowledge of them is limited. This study investigates relatively recent governance arrangements in state-owned enterprises in Norway, emphasizing their content and organization of quality assurance. The arrangements are compared with the more established “State Project Model”, a governance arrangement set up by the Ministry of Finance in 2000, including major public projects with budgets exceeding USD 110 million. Through case studies, comprising documents and interviews, and using the State Project Model as a reference frame, differences in the studied arrangements’ comprehensiveness were found. Finding the appropriate level of governance is challenging, yet potential for mutual learning and improvement across different arrangements is revealed. For state-owned enterprises with sectoral policy objectives, the government should ensure that political control is not undermined. This study provides recommendations for further improvement of governance arrangements and adds to the general understanding of state-owned enterprises and major public projects’ front-end phase.

Strengthening Anti-Bribery Governance through Integration of GCG with SNI ISO 37001: 2016 ABMS

The government's desire to improve the quality of State-Owned Enterprises (SOEs) by implementing GCG is considered not yet optimal because there are still several cases of non-compliance by SOEs with high GCG scores. Therefore, a clear standard or method is needed so that the implementation of GCG in State-Owned Enterprises (SOEs)can be carried out more optimally. The purpose of this research is to find out whether SNI ISO 37001: 2016 Anti-Bribery Management System (ABMS) can be integrated with GCG in order to improve the quality of governance in State-Owned Enterprises. The discussion is carried out in two parts: first, a descriptive discussion related to GCG and ISO 37001: 2016 itself, and second, a discussion related to how to identify and integrate GCG with ISO 37001: 2016. This study uses descriptive qualitative analysis method, with literature study and analysis of related laws and regulations. The results show that ISO 37001: 2016 can be one of the guidelines or a foundation for SOEs to implement GCG in accordance with the Regulation of the State Minister for State-Owned Enterprises Number: PER-01 / MBU / 2011. It is recommended that SOEs start implementing GCG with reference to ISO 37001. : 2016. However, it should be understood that SNI ISO 37001: 2016 is not the only guideline or reference because there are several other things that must be fulfilled in GCG that are not listed in SNI ISO 37001: 2016.

ORGANIZATIONAL FOUNDATIONS OF STATE EXECUTIVE ADMINISTRATIONS’ PARTICIPATION IN STATE-OWNED ERTERPRISES’ GOVERNANCE

The article considers and analyses theoretical and practical aspects of organizational foundations of participation of state executive authorities in governance of state-owned enterprises. Organizational aspect revealed through function and executive authority institutions that perform function. Efficiency of implementation of function as to of state executive authorities in governance of state-owned enterprises was considered as criteria of proper performance. The conclusions on dispersal function of governance, improper performance of executive authorities function as to governance of state-owned enterprises and need to establish liability and evaluate the effectiveness of officials in state-owned enterprises’ governance were reached.

Audit Supervision, State-owned Assets Supervision and State-owned Enterprise Governance: A Study Based on the Background of Audit Officials in State-owned Assets Supervision

In the context of the deepening reform of state-owned enterprises (SOEs) and particularly the duty of accountability audit and supervisory committee assigned to the government audit offices during the recent reform of government institutions, audit supervision plays an important role in the supervision of state-owned assets (SOAs) and the governance of SOEs. The existing literature mainly studies the governance effect of government audit on the listed central SOEs based on the audit finding announcements of central SOEs issued by the National Audit Office, but it generally regards government audit as a black box. In fact, officials usually play an active and significant role in the government’s decision-making. Therefore, this paper tries to examine the underlying mechanism of the governance effect of audit supervision on SOEs from the perspective of the background of audit officials in the supervision of SOAs.We conduct an empirical study with a sample of A-share listed local SOEs from 2003 to 2017, and find that the background of audit officials in the supervision of SOAs can improve the accounting information quality of SOEs. This result is more significant when audit officials’ supervision experience of SOAs is longer, audit enforcement is more powerful, and SOEs’ internal corporate governance is weaker. But the intervention of local leading officials due to political promotion incentives can weaken the governance effect of audit officials on SOEs. Further analysis indicates that the background of audit officials in the supervision of SOAs also has a real effect on SOEs, which can reduce the real earnings management, improve innovation performance, and ultimately increase the firm value.The findings of this paper not only confirm the heterogeneous impact of audit officials’ subjective initiative on the supervision of SOAs and the governance of SOEs from the perspective of individual work experience, but also reveal the transmission path of local leading officials’ influence on the decision-making of micro enterprises from the perspective of government audit, a professional administrative institution. Meanwhile, in the process of realizing the integration and optimization of audit supervision power and establishing a unified and efficient audit supervision system for the supervision of SOAs, the regulator should not only pay attention to training and improving the professional competence of audit officials through position experience, but also further strengthen the independence of audit offices and audit officials through deepening reform.

Does Internal Corporate Governance Complement or Substitute for External Auditing? Evidence from China's Anti‐corruption Campaign

Two competing hypotheses have been developed for the relationship between internal corporate governance and external auditing. One proposes a complementary relationship, while the other suggests it is substitutable. This study takes advantage of China's recent anti‐corruption campaign as a quasi‐natural experiment to explore this relationship. Using a difference‐in‐differences approach, we find that, after the campaign, internal corporate governance improved more in SOEs (state‐owned enterprises) than in non‐SOEs. SOEs were less likely to choose Big 10 auditors after the campaign, while audit firms assigned less experienced auditors to their SOE client firms and charged lower audit fees. These effects were more pronounced in SOEs that exhibited greater improvement in corporate governance. Overall, we find the anti‐corruption campaign improved corporate governance in SOEs but, at the same time, reduced external audit quality, which supports the substitution view. We argue that this result might be driven by the fact that SOEs have limited demand for high‐quality accounting information because the Chinese government maintains strong control over the capital markets.

An assessment of corporate governance implementation in state-owned enterprises of the emerging economy

South African state-owned enterprises (SOEs) form a critical cog in the state machinery. The significance of sound corporate governance has become more pronounced as citizens demand more accountability and value in the use of public resources (Vicente, 2020). The paper utilised a qualitative desktop approach, a case study design and thematic analysis to investigate board and executive management practices in the North West Development Corporation (NWDC) corporate governance, factors hindering good corporate governance and lastly recommendations that can be offered to enhance good corporate governance. The NWDC is a regional development finance institution in South Africa, which over the years has continued to implement adverse audit outcomes (AGSA, 2019b). The thematic analysis findings revealed a direct relationship between lack of consequence management and the state of poor corporate governance in the NWDC. The lack of ethical leadership lies at the heart of this morass of SOEs in general. The study, therefore, recommends the full implementation of the existing legislative framework, the Codes on Good Governance and the anti-corruption national strategy in order to inculcate accountability in the South African public agencies that include the NWDC. The paper is relevant in addressing the Auditor-General qualified audits, which underlines the ineffectiveness of the existing SOE governance system by not inherently correlating corporate success with the presence of deeper corporate governance standards and ethical behaviour.

Practices on Accountability and Transparency of State-Owned Enterprises

The accountability and transparency of state-owned enterprises have traditionally been criticized in theory and practice. This motivates us to conduct a study in which to select and summarize various practices of accountability and transparency of state-owned enterprises used in member countries of the Organization for Economic Co-operation and Development and other countries. These practices represent a useful basis for application in Bulgaria, which will contribute to reducing agency problem and improving the corporate governance of state-owned enterprises.

Estado e mercado na reforma da governança corporativa chinesa

Depois de um longo período de exclusão do debate econômico, o estrondoso sucesso da transformação estrutural da China voltou a colocá-la no centro do debate. Na base de tal sucesso, está o processo de reforma econômica, que teve como um dos seus eixos a modernização da governança corporativa das empresas estatais (SOEs). O objetivo do artigo foi discutir as diretrizes de tal modernização e como esta se articula com o Sistema Partido-Estado. Para atingir o objetivo proposto, discutiu-se instituições, governança corporativa moderna e a reforma da governança das SOEs chinesas. Conclui-se que mesmo considerando a opacidade de certas relações informais na governança das SOEs, algumas evidências parecem apontar para efetividade da reforma na melhoria da performance e atração de capitais delas.

Strengthening Corporate Governance of Vietnamese SOEs

State-owned enterprises (SOEs), particularly large corporations and economic groups, play a core role in the Vietnamese economy. Thus, their corporate governance is likely to exert a substantial impact on the efficiency and competitiveness of the whole economy. In this paper, we review the past reform efforts and current state of corporate governance at Vietnamese SOEs and identify key challenges they face. In doing so, we make a reference to the OECD Guidelines on Corporate Governance of SOEs, and make a comparison with the evolution of corporate governance at Chinese and Korean SOEs. We note that Vietnamese SOEs have a long way to go for improving their corporate governance. Line ministries are advised to phase out their role of exercising state ownership rights by dominating the SOE boards of directors. Separate accounting is needed for sociopolitically motivated services provided by SOEs, which is a prerequisite for better evaluation of CEO performance and holding them more accountable. Recent push for better transparency and disclosure at SOEs should be kept on. And, high priority should be given to strengthening board independence and professionalism at both SOEs and equitized, exchange-listed enterprises.

How Do Politicians Capture a State? Evidence from State-Owned Enterprises

This article discusses political state capture in the context of party patronage. Evidence of this is delivered from state-owned enterprises (SOEs) and the rotations of members of their management and supervisory boards. In this case, it is deemed that an interest group, which consists of politicians and representatives in the government administration, decides about the appointment and dismissal of board members through the corporate governance of SOEs and ownership policy of the state. We analyzed the scale and intensity of rotations in Poland of about twelve thousand joint-stock companies in the years 2001–2017 according to their ownership structure. We show that changes of managers and supervisory board members in state-owned enterprises are higher than in private companies and are related to political elections. We estimated that on average three months after a new government is formed, a peak of changes in the composition of boards is observed, though they are earlier in the case of a supervisory board. We conclude that this can be regarded as an example of state capture by politicians.

Institutional Logics and the Internationalization of a State-Owned Enterprise: Evaluation of International Venture Opportunities by Telecom Finland 1987–1998

We contribute to the research on internationalization of state-owned enterprises (SOEs) by studying the coevolution of state governance of SOEs and SOEs’ evaluation of international venture opportunities during a shift in dominant institutional logic from state to market logic. Using a novel digital historical method to study Telecom Finland, we argue that as state governance mechanisms change due to a logic shift, rationales underlying SOEs’ internationalization can significantly change and impact SOEs’ geographical and partner preferences. However, a logic shift also affords SOEs significant influence over the formation of new state governance policies under the new dominant logic.