Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222717 
Year of Publication: 
2019
Series/Report no.: 
ADBI Working Paper Series No. 950
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
The purpose of this paper is to empirically investigate the relationship between ownership identity and the performance of firms in terms of profitability and solvency. Using cross-sectional data covering over 25,000 firms worldwide and by employing various empirical methods, we find robust support for the inferior performance of government enterprises over privately owned firms. Specifically, state-owned enterprises (SOEs) tend to be less profitable than private-owned enterprises. However, they appear to be more dependent on debt for their financial need and are, thus, better leveraged. Additionally, SOEs are more labor intensive and have higher labor costs. Thus, evidence from this study could be interpreted to mean that privatization could improve the performance of public firms. However, a study over a longer period is needed before these results can be considered conclusive.
Subjects: 
performance
ownership
solvency
state-owned enterprises
private-owned enterprises
JEL: 
G32
G341
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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