Government Ownership in Listed Firms Around the World

Open access

Abstract

Based on the first of its kind large-scale research on worldwide government ownership from 47 countries, the results show that government owners like to be the largest blockholders; if government is the largest blockholder, the size of its ownership is also quite big. Government ownership is mostly distributed in banks, infrastructure and public utility companies, and strategic manufacturing companies. While there are various theoretical arguments on the size and industry distribution of government ownership, this study provides first-ever empirical evidence. In sum, this paper contributes significantly and originally to our understanding on government ownership, and lay out further directions for future research on the complicated corporate governance issues of government ownership.

Anderson, R. C., & Reeb, D. M. (2003) Founding Family Ownership and Firm Performance: Evidence from the S&P 500. Journal of Finance, 58:3, pp. 1301-1328.

Balding, C., (2008) A Portfolio Analysis of Sovereign Wealth Funds’. Available online at SSRN: http://ssrn.com/abstract=1141531

Bortolotti, B., Fotak, V., & Megginson, W. L. (2015) The sovereign wealth fund discount: evidence from public equity investments. Review of Financial Studies: hhv036.

Boyd, B. K., & Solarino, A. M. (2016). Ownership of Corporations A Review, Synthesis, and Research Agenda. Journal of Management 42, no. 5: 1282-1314.

Cheng, Q. (2014) Family firm research–A review. China Journal of Accounting Research 7, no. 3: 149-163.

Chhaochharia, V. & Laeven, L. A. (2009) The Investment Allocation of Sovereign Wealth Funds’ (July 8). Available online at SSRN: http://ssrn.com/abstract=1262383

Claessens, S., Stijn, S. D. & Lang, L. H.P. (2000) The Separation of Ownership and Control in East Asian Corporations. Journal of Financial Economics, 58, 81-112.

Economist. (2012) Emerging-market multinationals: The rise of state capitalism. The Economist, January 21. available online at www.economist.com/node/21543160

Estrin, S., & Perotin, V. (1991) Does Ownership Always Matter? International Journal of Industrial Organization 9, 1:55–72, Mar

Faccio, M., & Lang, L. H.P. (2002) The Ultimate Ownership of Western European Corporations. Journal of Financial Economics 65(3):365−395.

Faiola, A. (2005) Japan Approves Postal Privatization. Washington Post Oct 15. available online at http://www.washingtonpost.com/wpdyn/content/article/2005/10/14/AR2005101402163.html.

Gelb, A., Tordo, S., Halland, H., Arfaa, N., & Smith, G. (2014) Sovereign wealth funds and longterm development finance: risks and opportunities. available online at http://www.g20.utoronto.ca/2014/WBG_Sovereign_Wealth_Funds_and_Long_Term_Development_Finance_Risks_and_Opportunities.pdf

Gerschenkron, A. (1962) Economic Backwardness in Historical Perspective. Harvard University Press, Cambridge, MA

Government sells remaining shares in Citigroup; investment to net $12 billion total profit for taxpayers“, The Washington Post, Retrieved April 15, 2017

Holderness, C. G. (2009) The Myth of Diffuse Ownership in the United States. Review of Financial Studies, Vol. 22, No. 4, pp. 1377-1408

Kay, J. A., & Silberston, Z. A. (1984) The new industrial policy - privatisation and competition, Midland Bank Review, Spring, 8-16.

Kornai, L. (1980) The economics of shortage. North-Holland, Amsterdam

La Porta, R., Florencio, L., & Shleifer, A. (1999) Corporate Ownership around the World. Journal of Finance, 54, 471-518

La Porta, R., Florencio, L., & Shleifer, A. (2002) Government Ownership of Banks, Journal of Finance, vol. 57(1), pages 265-301

Lewis, A., (1949) The Principals of Economic Planning. London, George Allen & Unwin Ltd.,

Li, D., Moshirian, F., Pham, P., & Zein, J. (2006) When Financial Institutions are Large Shareholder: The Role of Macro Corporate Governance Environments. Journal of Finance, Vol. LXI, No. 6, pp. 2975-3007, December

Liu, K. (2016) Government Block Holder Ownership, Sovereign Wealth Fund and Firm Performance. Journal of Advanced Studies in Finance, 7(2), pp.95-106.

Loderer, C., & Martin, K. (1997) Executive Stock Ownership and Performance: Tracking Faint Traces. Journal of Financial Economics, 45: 223-255

Maury, B., & Pajuste, A. (2005) Multiple Controlling Shareholders and Firm Value. Journal of Banking and Finance, 29, 1813-1834.

Maury, Be., (2006) Family Ownership and Firm Performance: Empirical Evidence from Western European Corporations. Journal of Corporate Finance 12, 321-341.

Megginson, W. L. (2005) The financial economics of privatization. Oxford University Press on Demand.

Megginson, W. L., & Netter, J. M. (2001) From State to Market: A Survey of Empirical Studies on Privatization. Journal of Economic Literature, Vol. 39, No. 2 (Jun), pp. 321-389

Megginson, W. L., Ullah, B., & Wei, Z. (2014) State ownership, soft-budget constraints, and cash holdings: Evidence from China’s privatized firms. Journal of Banking & Finance 48: 276-291.

Noll, R. G. (2000) Telecommunications Reform in Developing Countries, in Economic Policy Reform: The Second Stage. Anne O. Kreuger, ed. Chicago: U. Chicago Press.

Peng, M. W. & Jiang, Y. (2006) Family Ownership and Control in Large Firms: The Good, the Bad, the Irrelevant - and Why. William Davidson Institute Working Paper No. 840. Available online at SSRN: http://ssrn.com/abstract=938173

Rondinelli, D. & Iacono, M. (1996). Policies and Institutions for Managing Privatization. International Training Centre, ILO, Turin, Italy. Available online at http://staging.ilo.org/public/libdoc/ilo/1996/96B09_313_engl.pdf

Sauvant, K. P., Sachs, L. E., & Jongbloed, W. P. S. (2012). Sovereign investment: Concerns and policy reactions. Oxford University Press, 2012.

Shailer, G., & Wang, K. (2015). Government ownership and the cost of debt for Chinese listed corporations. Emerging Markets Review 22: 1-17.

Shleifer, A. (1998), State Versus Private Ownership’. Journal of Economic Perspectives, 12(4), 133–50.

Simons, H. (1948) A Positive Program for Laissez-Faire in Economic Policy for a Free Society. Chicago: University Press of Chicago, 1948

Sobel, R. (1999). The Pursuit of Wealth. New York: McGraw Hill

Sun, X., Li, J., Wang, Y., & Clark, W. W. (2014). China’s Sovereign Wealth Fund Investments in overseas energy: The energy security perspective. Energy Policy 65: 654-661.

“The Biggest IPOs in the world”. Business Week Oct 26, 2006. Available online at http://images.businessweek.com/ss/06/10/world_ipos/source/1.htm.

Villalonga, B., & Amit, R., (2006), How do Family Ownership, Management, and Control Affect Firm Value? Journal of Financial Economics. Volume 80, Issue 2, May, pp 385-417