Government-owned Firms Research Articles

BOARD ATTRIBUTES AND ENVIRONMENTAL SUSTAINABILITY REPORTING: THE INFLUENCE OF OWNERSHIP STRUCTURE

This study aims to investigate the influence of ownership structure on the extent to which the board attributes in Sub-Saharan Africa (SSA) promote environmental Sustainability Reporting. Using the dynamic panel-data estimation method, the paper uses 1,970 firm-year observations manually extracted from publicly listed non-financial firms' financial reports in SSA from 2012 to 2021. The paper finds that the block ownership structure does not significantly moderate board attributes and environmental sustainability reporting in publicly listed SSA forms. Also, Government-owned firms moderate board independence and environmental sustainability reporting. The paper further finds that foreign ownership structure influences the relationship between board gender diversity and environmental sustainability reporting in SSA. The paper finds that the relationship between board attributes and ecological sustainability reporting differs and depends on the ownership structure type. These findings imply that corporate governance reforms in the ownership structure should be implemented to improve environmental reporting in SSA. To strengthen sustainability reporting, policymakers in SSA should prioritize the development of robust regulatory frameworks and consider the nature of ownership structure since the influence of corporate governance characteristics depends on the type of ownership structure. The paper presents a new perspective on board attributes and environmental sustainability literature by uncovering the influence of ownership structure on board attributes and environmental sustainability reporting in SSA. The paper contributes to board attributes and environmental sustainability literature and holds significant theoretical, conceptual, and practical implications.

A comprehensive framework for strategic knowledge management in civil service organisations of Mauritius

The acquisition and utilisation of knowledge possessed by employees within an organisation, particularly in the context of the Civil Service, can be a crucial asset in achieving the organization's continuous business goals and objectives. This study investigates the methods and implementation of Knowledge Management (KM) in the public service Organisations of Mauritius. The objective is to identify the attributes that contribute to the effectiveness of knowledge management (KM) and address significant obstacles in the KM process. The objective of this study is to increase awareness of Knowledge Management (KM) as a feasible option for enhancing the efficiency of civil service organisations. The study results imply that knowledge management in civil service organisations is still in its nascent phase, indicating a significant need for advancement in the whole knowledge management process. This study examines the present condition of knowledge management in the civil service organisations of Mauritius. The study primarily aimed to collect empirical data on the subjective impressions, attitudes, and perspectives of the respondents or interviewers regarding the investigated issues. The study use interpretive methodology rather than positive approaches. Nevertheless, this research solely concentrates on the 25 governmental ministries of the Republic of Mauritius. The proposed framework is anticipated to be easily implemented in para-statal entities and government-owned firms, necessitating only minimal adjustments. The objective of this project is to build an empirical basis for the creation of a knowledge management system tailored to the needs of Civil Service Organisations. This study focuses on analysing the mechanisms of Knowledge Management (KM) and their impact on productivity and efficiency in Mauritian Civil Service Organisations.

Understanding Job Satisfaction and Its Influences in Nigerian Government Firms: A Systematic Literature Review

Job satisfaction is seen as a critical factor in employee performance. This article focuses on a thorough review of the literature to identify the numerous elements that influence job satisfaction and assess their relative importance in shaping employee performance in government-owned firms. The existing literature conceptualizations of job satisfaction are diverse, reflecting the broadness of critical perspectives on the subject. Job satisfaction is conceptualized in various ways in the existing literature, emphasizing the intricacy of key views on the subject. A systematic literature review entailed the following steps: (a) identifying databases and a set of publications; (b) selecting articles and creating a database; and (c) doing bibliometric analysis, content analysis, and verifying the relevance of results to future study. The review included publications from 2013 through 2023 and encompassed psychology, sociology, economics, and management science. Examining existing theoretical writings and practical tests reveals psychological and methodological flaws. Despite countless critical attempts to define exactly what constitutes job satisfaction, no clear and obvious definition has emerged. Similarly, there is a lack of crucial consensus among academics about what factors contribute to job satisfaction, resulting in diverse research methodologies. However, despite the growing popularity of job satisfaction studies, several of these characteristics have yet to be thoroughly investigated, and some research has produced inconsistent conclusions regarding the intensity of specific elements’ influence on job satisfaction. Hence, this study meets that demand by doing a thorough review of the literature and showing the direction of recent research.

Government Ownership and the Public Information Content of Insider Trading: International Evidence

This paper investigates the political determinants of informed insider trading using an international sample of firms from 28 countries. We show that insider trading in state-owned firms (SOEs) is statistically and economically more profitable and informative than in non-state-owned firms, indicating a unique political information advantage enjoyed by these insiders. Further analysis shows that insider trading in government-owned firms becomes more profitable during nationwide periods of political uncertainty and when industry-specific government actions are introduced. Moreover, the aggregate insider trading in SOEs better predicts future stock market returns than that in non-SOEs. These results suggest that the political information advantage of SOE insiders is evident in both the idiosyncratic and macroeconomic information content of insider trading, consistent with the superior ability of these insiders to interpret the economic impact of the country-, industry-, and firm-specific government actions.

Are sustainable firms more innovative? The case of China

Although the impact of corporate social responsibility (CSR) on business and market performance has been getting attention in China, its influence on innovation outcomes has not been fully investigated. This study utilises patent information and CSR measurements from Orbis and Refinitiv, respectively, and empirically investigates the determinants of corporate innovation, focusing specifically on the influence of CSR. We find a positive relationship between CSR and innovation outcomes, namely patent applications and patents granted, which are also found in developed countries. Furthermore, our findings provide new insights into inconclusive factors such as the impact of Chinese economic policies or government ties on innovation performance. In particular, we find that government-owned firms no longer have a relative advantage in innovation.

Do firms release boilerplate CSR reports to meet legitimacy requirements?

ABSTRACTBased on Chinese unique corporate ownership structure, we document that local government-owned firms are more inclined to disclose boilerplate CSR reports with little firm-specific information to circumvent substantive disclosure, although they do release CSR reports to convey that they are acting in the broader interests of society. Both economic and environmental pressures from the local government enhance firms’ adherence to boilerplate. Firms mandated to release CSR reports are more likely to follow boilerplate due to the ‘minimum-requirement’ orientation.

Market Warnings : Learning from the Short-Term Impact of COVID-19 on Stock Market Constituents

Purpose : The paper investigated the short-term impact of the lockdown announcement due to COVID-19 on various industries in India using firms’ stock returns and credit ratings. Design/Methodology : The paper used event study methodology to analyze abnormal returns on stocks and credit rating changes of firms following the lockdown to understand the impact on the debt servicing of firms. Findings : The paper found a heterogeneous impact of lockdown on various industries. Pharmaceuticals, chemicals, FMCGs, and telecom sectors saw positive abnormal returns, while textiles, financial services, construction, services, cement, and automobile sectors were the worst affected. The paper also found that smaller companies were more susceptible to the effects of such lockdowns. Indian subsidiaries of foreign MNCs and Central Government-owned firms fared better than privately-owned domestic firms. The debt servicing ability of firms was unimpacted due to the debt relief package announced to mitigate the impact of the lockdown. Practical Implications : The paper's findings have implications for investors and managers who can make informed decisions in advance to reduce the risk to their investment if such a black swan event is expected. The paper's findings could help policymakers identify sectors that require immediate support due to the disruption from such an event. Originality : The paper is unique in investigating the impact of the lockdown due to COVID-19 on companies across different industries, with different ownership groups and sizes. We have not come across such a detailed study investigating the impact of COVID-19 on various industries in India.

Financing low-carbon growth in Africa: Policy path for strengthening the links between financial intermediation, resource allocation and environmental sustainability

Financial intermediation drives resource allocation in the economy, which can influence the carbon emission intensity of economic output (CO2gdp). This study examines the impact of bank credit allocation on CO2gdp in African economies during the period 1995–2018. Two policy scenarios are empirically evaluated, taking into account the behaviour of financial intermediaries with limited financial resources for credit supply to the productive sectors. Policy Scenario I, a credit allocation system that places a greater emphasis on financing demands of government and state-owned enterprises (GSEs), has a positive (increasing) effect on CO2gdp. The alternative policy scenario, Policy Scenario II, which places a greater emphasis on financing demands of private sector entities (PSUs), has a negative (decreasing) effect on CO2gdp with stronger impact in the more carbon-intensive economies. In addition, renewable energy consumption makes greater contribution to reducing CO2gdp under Policy Scenario II. By implication, more credit supply to the PSUs strengthens the link between resource allocation and economic efficiency, resulting in the creation of greener economic output. Thus, the development of financial intermediation could play a role in helping African economies avoid carbon-intensive path to economic growth. • Credit allocation and carbon intensity of economic output in Africa examined. • Under Policy scenario I more credit are allocated to government-owned firms. • Under Policy scenario II more credit are allocated to the private sector. • Policy scenario II strengthens low-carbon growth. • The impact of renewable energy consumption increases under Policy Scenario II.

Environmental behaviour under credit constraints – Evidence from panel of Indian manufacturing firms

Firms play a major role in facilitating green growth in developing nations by promoting environmental protection investment to control pollution caused during the manufacturing process. The paper explores whether the financial vulnerability of firms curbs their investment towards environmental practices that eliminate the creation of wastes or pollutants and hence acts as a deterrent towards green economy. Using firm-level data for manufacturing firms from 2010 to 2019, it is confirmed that financial barrier is an encumbrance for eco-investment by firms. We also focus on the environmental behavior of firms classified according to their ownership structure observing that government-owned firms (GOFs) tend to rely less on their internal and debt capital to finance their environmental investment, whereas private-owned firms (POFs) rely mainly on their internal capital. However, internal financing methods have generally no significant impact on the eco-investment decision of foreign-owned firms (FOFs).

Does Local Governments’ Environmental Information Disclosure Promote Corporate Green Innovations?

ABSTRACT Using the pollution information transparency index (PITI) as a measure of environmental information disclosure by the local governments in China, we find that the higher the pollution information transparency, the more likely green innovations are to occur. Channel tests show that environmental information disclosure by the local governments promotes corporate green innovations through political pressure channel and law enforcement channel. Moreover, the environmental information disclosure has long-term effects on corporate green innovations, and the relationship between environmental information disclosure and corporate green innovations is more pronounced with firms owned by local governments and private firms than central government-owned firms. We also show that firms with fewer agency problems are inclined to have more green innovations.

Disinvestment in Indian central public sector enterprises: a performance improvement measure

PurposeThe purpose of this study is to represent an attempt to empirically capture the impact of disinvestment on the financial and operating performance of 26 Bombay Stock Exchange (BSE) listed central public sector enterprises (CPSEs) in India which got divested through stock market mechanism during the time period of 2000–2014.Design/methodology/approachThrough ratio analysis different ratios such as return on assets, return on equity, net income efficiency, debt equity, dividend payout and employment levels have been computed. Pre- and post disinvestment performance of these firms is examined through Wilcoxon signed-rank test. The present research endeavors to examine the impact of disinvestment through random effect panel data models in order to control the effect of other firm specific variables.FindingsThe overall results of the study indicate statistically significant fall in profitability ratios. The empirical results have not witnessed positive effect of disinvestment on the profitability of the CPSEs; rather, this effect has found to be negative. The possible reasons behind these negative results could be poor pre disinvestment financial health of CPSEs, negative rate of return on capital employed by PSEs and inefficiency which need to be tested empirically by future researchers.Originality/valueThe fact that government-owned firms are typically less proficient or at least less gainful than private-owned firms is widely hypothesized. Therefore, the disinvestment policy aims at dropping the participation of the public sector in the economic actions of the country in order to support the private sector. The present study is a first of its kind to study the impact of disinvestment on the profitability of the firms, which got divested through stock market mechanism since the year 2000 by applying both univariate and multivariate analysis.

Politics, policy and fixed-line telecommunications provision: Insights from Australia

Over the past 40 years, telecommunications policy worldwide has been dominated by the privatisation of former government-owned firms, the pursuit of increasing competition as well as the delegation of day-to-day operations of industry decision-making and oversight from core governments to autonomous regulators sitting at arms-length from political decision-making. One of the most (apparently) dramatic reversals of this trend has occurred in Australia where the federal government has set up a state-owned company (NBN Co) to fully replace and upgrade the fixed-line infrastructure for voice and broadband communications for the entire country. Some argued that the NBN heralded a reversal of a “failed, neoliberal” deregulation and pro-competition policy agenda in Australia, and a return to “social democratic” values. The NBN has attracted interest as a possible model for other governments looking to fund broadband infrastructure.The NBN Co's network is nearing completion. It has proved disappointing in many ways, with costs escalations, missed deadlines and a downscaling of the original full-fibre footprint to a mixed technology model (MTM). It has also proved politically divisive, with some claiming the MTM changes represent the reassertion of a neoliberal political agenda. In this paper, we trace the evolution of the fixed-line telecommunications industry in Australia from the 1980s to the present along the dimensions of privatisation, deregulation and competition in voice, broadband and policy settings. We find that contrary to popular political rhetoric, the Australian industry reforms have been characterised by only a partial and inconsistent progression towards the international policy objectives. In particular, ongoing government ownership of the incumbent created perverse incentives for both regulatory and industry actors and ensured political involvement in import network investment and operations decisions which in other jurisdictions are delegated to private-sector owners and regulators at arms-length from political influence. We contend that the NBN was not a social democratic response to failed neoliberal policies, nor was the MTM a neoliberal reassertion. Rather, the politicisation of the NBN is a function of the inability to decentralise ownership and control of the industry away from the government. These issues will continue to dominate the Australian debate, as the statutory context requires the privatisation of the NBN within five years of its projected 2021 completion. Extreme caution is warranted for jurisdictions looking to the NBN model for guidance.

Does board independence enhance firm value of state-owned enterprises? Evidence from India and China

PurposeThis study aims to examine the effectiveness of governance in state-owned enterprises (SOEs) and explores if board independence enhances the firm value of SOEs in India and China. The study further explores the moderation impact of promoter ownership in enhancing firm value.Design/methodology/approachThe study is confined to government-owned enterprises in India and China and is based on a sample of 53 central government-owned firms listed in National Stock Exchange of India and 110 state-owned firms listed in Shanghai Stock Exchange of China for the period 2010–2017. A fixed-effect panel regression analysis has been used to examine the effect of board independence on firm value.FindingsThe study found that board independence adds value to the SOEs in India and China and the presence of independent directors (IDs) in the board of SOEs act as better monitors of performance to protect the interest of minority shareholders. Probably, they minimize agency conflict and provide resources to the firm and management. The greater the government shareholdings, the board independence further enhances value of SOEs in India and China.Practical implicationsCompliance with guidelines on IDs in SOEs serves as an effective corporate governance mechanism and the presence of IDs can signal better firm performance. The government promoters align with the IDs in better monitoring of SOE performance.Originality/valueThe study is unique and contributes to the literature by examining the impact of board independence on firm value in the context of SOEs in India and China and also provides insight on the effect of promoter ownership on the effectiveness on board independence.

Firm borrowing capacity, government ownership and real earnings management

Purpose The purpose of this paper is to examine borrowing capacity (BC) of government-owned firms and whether real earnings management (REM) activities moderate the sensitivity of firm BC to government ownership. Design/methodology/approach A simultaneous equation analysis is applied to study 210 Tunisian non-financial firms over the 2001–2014 period. Findings The empirical results provide substantial evidence indicating that government-owned firms have higher BC and significant REM than other firms; the relationship between government ownership and firm BC is partially moderated by REM activities. Practical implications The findings imply that the implicit credit guarantee of government is not necessarily the unique determinant of firm BC and highlight the role of lenders in monitoring discretionary real transactions in government-owned and protected firms. These implications should be taken in to account by public sector policy makers. In particular, the findings predict that the current government accounting reform in Tunisia on the basis of IPSAS will, probably, improve information quality, but it is still insufficient to control real activities in public institutions. Originality/value This study extends a growing research stream on the relationship between BC and government ownership by focusing on the moderating effect of REM on this relationship and by considering the endogeneity issue. The findings provide evidence that government-owned firms use REM practices to improve their BC. Examining these practices in developing countries provides an opportunity to evaluate the efficiency of their public sector reforms and their effect on a firm’s performance and financing decisions.

Female directors and the cost of debt: does gender diversity in the boardroom matter to lenders?

PurposeThis paper aims to investigate the question concerning whether gender diversity in the boardroom matters to lenders or not?Design/methodology/approachTo answer this question, the authors use the data from 2009 to 2015 of all A-share listed companies on the Shanghai and Shenzhen stock exchanges. The authors use ordinary least squares regression and firm fixed effect regression to draw our inferences. To check and control the issue of endogeneity the authors use one-year lagged gender diversity regression, two-stage least squares regression, propensity score matching method and Heckman two-stage regression.FindingsThe results suggest that the presence of female directors on the board reduces managerial opportunistic behavior and information asymmetry and, consequently, creditors’ perceptions about the probability of loan default and the cost of debt. The authors find that lenders charge 4 per cent less from borrowers that have at least one female board member than they do from borrowers with no female board members. The authors also find that the board structure (i.e. gender diversity) of government-owned firms also matters to lenders, as government-owned firms that have gender-diverse boards have a lower cost of debt (i.e. 5 per cent lower interest rate).Practical ImplicationsThe findings have implications for individual borrowers and for regulators. For example, borrowers can get debt financing at lower rates by altering their boards’ composition (i.e. through gender diversity). From the regulatory perspective, the results support recent legislative initiatives around the world regarding female directors’ representation on boards.Originality ValueThis paper makes several contributions. First, beyond the recent studies on boardroom gender, the authors investigate the relationship between gender diversity in the boardroom and the cost of debt. Second, the authors extend the literature on the association between government ownership and cost of debt by first time providing evidence that the board composition (e.g. gender diversity) of government-owned firms also matters to the lenders. The other contributions are discussed in the introduction section.

Moderating Role Of Ownership In Relationship Between CSRD And Firm Performance

In the last few years, the importance of corporate social responsibility gained tremendous attention from researchers and policymakers. The stakeholder and legitimacy theories help to understand the importance of corporate social responsibility towards firms’ performance. Although, abundant literature is available on the link between CSRD and firm performance but for China, this research area is still in a drought. Considering this, the purpose of this study is to find the relationship between CSRD and firm performance and ownership structure role in this relationship for China. Various parameters such as; disclosure score, ownership structure and performance indicators like ROA, TQ and EPS are addressed in this study. The Data used for this study is collected from Shanghai stock exchange, Shenzhen stock exchange and CSMAR database for selected companies from 2006 to 2014 including 3462 observations. Accounting and market measures are taken as performance indicators. Disclosure score and ownership structure are used as dependent variables with various control variables. Regression analysis revealed that, after controlling the size of firms, the relationship between CSRD and firm financial performance is positively associated, but this relationship turned adverse in the case of EPS due to shareholders uncertainties about CSR. The relationship between performance and ownership structure is also significant but adversely associated. The results also indicated that ownership structure plays a moderating role for the relationship between firm performance and CSRD. Furthermore, the graphical analysis also supports our empirical findings that the ownership control affects the performance of enterprises and CSRD. The state-owned firms have less tendency of disclosing the CSR information as compared to nonstate-owned and the effect of CSRD on performance varies accordingly. This study explores the importance of ownership structure and CSRD towards ultimate goals of a company. Furthermore, this study finds that government-owned firms are not performing well for society in China. Therefore, government needs to consider private-public sector partnership to improve the quality of CSRD and performance. This study determined that the ownership structure moderate the relationship between CSRD and Firm performance. Thus, our work is an important addition to existing literature and useful for government to improve concerned policies.

When Does Management Develop? External Linkages, Structured Practices, and Productivity in Chinese Firms

This study presents evidence that structured management practices and their relationship to productivity can vary with a firm's external institutional linkages. Combining ideas from new institutionalism with the empirical management literature, we formulate propositions of how external linkages could affect the development and utility of structured management practices. We test these propositions in a representative sample of 390 manufacturing firms in China, where state linkages, proxied by controlling ownership, stabilize operating conditions for a subset of government-owned firms in the country's authoritarian capitalist system. Specifically, we find that measures of structured management practices increase with the strength of linkages to the state, with state-owned firms scoring higher than domestic private firms. We further show that, on average, a firm's overall management practice score is positively and significantly related to total factor productivity (TFP) in state-owned firms, but the correlation is no different from zero in both domestic and foreign private firms. We hypothesize that in China state linkages may lengthen decision horizons and enable firms to benefit from introducing management practices for both instrumental and symbolic reasons.

Tax avoidance in government-owned firms: Evidence from Italy

ABSTRACTThis paper studies whether and why government-owned firms avoid taxation to a greater extent than wholly privately-owned firms do. By considering a sample of Italian listed corporations for the period between 2006 and 2011, it was found that government ownership had a systematically negative effect on corporate effective tax rate, with a prevalence of tax-planning policies focused on the long term. Managers of local government-owned firms focused on minimizing costs, even if this was to the detriment of national tax-revenue collection.

Unrelated acquisitions in China: The role of political ownership and political connections

In this paper, we examine government influence on the acquisition behavior of Chinese firms. Drawing from the state capitalism literature, we test hypotheses regarding the effect of provincial government ownership and managerial ties respectively on industry relatedness of firm acquisitions. We furthermore test hypotheses concerning the moderating effect of institutional development and governor age and tenure. We test our hypotheses based on analysis of 346 majority acquisition deals completed by first-time acquirers in China between 2002 and 2014. Our results show that provincial government-owned firms and firms with ties to the same are more likely to conduct unrelated acquisitions within their home province compared to acquisitions across provincial boundaries. Similar patterns do not exist for privately owned firms or for firms with no managerial ties to provincial governments. Institutional development and governor age and tenure are found to have no moderating effects. We relate our findings to the main theoretical views of state capitalism and suggest that our results reflect government attempts to promote economic growth and social development. Our study contributes to the understanding of Chinese state capitalism and the cross-province barriers for business in China.

The market value of government ownership

Motivated by the recent rise of state capitalism, this paper investigates the effects of government ownership on market valuations across a sample of publicly listed corporations from East Asia. We find strong, robust evidence that government-owned firms exhibit higher market valuation than non-government-owned firms, but the relation is not linear. The benefits of government ownership in terms of value premium extend to closely held firms where the government is a second blockholder. These effects stem from the financing decisions of government-owned firms and from the discount rate of cash flows, and hold prior to and during the recent global financial crisis. Additional analyses suggest that the effect of government ownership on valuation is influenced by financial market development and the quality of institutions and government in place. Collectively, our results imply that government ownership can be valuable.