When SOEs perform better? A multi country study

In this study we examine the contingent relationship between the state ownership and performance. We identify two mechanisms moderating the performance of SOEs: private block-holders and institutional environment. We argue that SOEs are more likely to achieve better performance when private better block-holders and developed institutions mitigate the political interference of the government. We test our hypotheses based on public firms in Italy and Russia from year 2002-2006. We find that private block-holders do improve the performance of SOEs, but limited to developed economies. We also find that the better developed institutions positively moderate the SOE’s performance. These findings contribute to our knowledge of the performance implications of SOEs.