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State ownership and corruption

Author

Listed:
  • Steve Billon

    (University of Strasbourg)

  • Robert Gillanders

    (Hanken School of Economics)

Abstract

We test two interesting results that can be obtained from a simplified version of the theoretical model of Shleifer and Vishny (Q J Econ 109(4):995–1025, 1994) that studies bargaining between politicians and managers of state-owned firms. The model suggests that firms with more state ownership tend to pay less in bribes but not have a different experience of costly obstacles imposed on them by politicians. In our full sample, the results suggest that a one percentage increase in state ownership is associated with a $125 reduction in the total annual informal payment of the firm and with a 0.5 % decrease in the probability that a firm will consider corruption to be an obstacle to their current operations. We refine these average relationships by splitting the sample by global region. Only in our Europe and Central Asia sample do we find strong evidence in support of the first result and again we find a significant effect of state ownership on obstacles.

Suggested Citation

  • Steve Billon & Robert Gillanders, 2016. "State ownership and corruption," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(6), pages 1074-1092, December.
    • Handle: RePEc:kap:itaxpf:v:23:y:2016:i:6:d:10.1007_s10797-015-9390-z
    DOI: 10.1007/s10797-015-9390-z
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    Cited by:

    1. Nirosha Hewa Wellalage & Stuart Locke & Helen Samujh, 2020. "Firm bribery and credit access: evidence from Indian SMEs," Small Business Economics, Springer, vol. 55(1), pages 283-304, June.
    2. Michael Breen & Robert Gillanders & Gemma Mcnulty & Akisato Suzuki, 2017. "Gender and Corruption in Business," Journal of Development Studies, Taylor & Francis Journals, vol. 53(9), pages 1486-1501, September.
    3. Dapeng Cai & Jie Li, 2019. "To favor more or less? Corporate lobbying over preferential treatment to state-owned enterprises," Journal of Regulatory Economics, Springer, vol. 55(3), pages 334-357, June.
    4. Wellalage, Nirosha Hewa & Fernandez, Viviana & Thrikawala, Sujani, 2020. "Corruption and innovation in private firms: Does gender matter?," International Review of Financial Analysis, Elsevier, vol. 70(C).
    5. Nirosha Wellalage & Sujani Thrikawala, 2021. "Does bribery sand or grease the wheels of firm level innovation: evidence from Latin American countries," Journal of Evolutionary Economics, Springer, vol. 31(3), pages 891-929, July.
    6. Nirosha Hewa Wellalage & Stuart Locke & Helen Samujh, 2019. "Corruption, Gender and Credit Constraints: Evidence from South Asian SMEs," Journal of Business Ethics, Springer, vol. 159(1), pages 267-280, September.
    7. Gillanders, Robert & Parviainen, Sinikka, 2014. "Experts’ Perceptions versus Firms’ Experiences of Corruption and Foreign Direct Investment," MPRA Paper 58991, University Library of Munich, Germany.
    8. Brzić, Barbara & Dabić, Marina & Kukura, Frane & Podobnik, Boris, 2021. "The effects of corruption and the fraction of private ownership on the productivity of telecommunication companies," Technology in Society, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    State ownership; Corruption; Privatisation; Bribery;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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