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Regulatory capture in agency performance evaluation: industry expertise versus revolving-door lobbying

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  • Sounman Hong

    (Yonsei University)

  • Taek Kyu Kim

    (Yonsei University)

Abstract

This study investigates the concept of bureaucratic competence. Specifically, we challenge the argument that a “careerists’ premium”—the tendency for public services run by careerists to receive better performance evaluations than services administered by other types of public managers—necessarily is explained by the superior expertise of career bureaucrats. Evidence that forms the basis of this possibility comes from performance evaluations of Korean state-owned enterprises (SOEs) managed by different types of executives between 2000 and 2015. The results of our analyses provide support for the existence of a careerists’ premium. However, we find that the premium is most salient and significant when executives had retired from the governmental agency that oversees the performance-evaluation process. Moreover, the gap between qualitative and quantitative assessment scores increase significantly when the evaluated SOEs are managed by career executives who have retired from the regulating agency. This result suggests that the oft-cited careerists’ premium may not necessarily signify careerists’ greater expertise; it may also be the product of lobbying and regulatory capture.

Suggested Citation

  • Sounman Hong & Taek Kyu Kim, 2017. "Regulatory capture in agency performance evaluation: industry expertise versus revolving-door lobbying," Public Choice, Springer, vol. 171(1), pages 167-186, April.
  • Handle: RePEc:kap:pubcho:v:171:y:2017:i:1:d:10.1007_s11127-017-0402-7
    DOI: 10.1007/s11127-017-0402-7
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    References listed on IDEAS

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    Cited by:

    1. Bong Hwan Kim & Sounman Hong, 2019. "Political change and turnovers: How do political principals consider organizational, individual, and performance information?," Public Choice, Springer, vol. 181(3), pages 291-308, December.
    2. Michelson, Noam, 2023. "The revolving door of former civil servants and firm value: A comprehensive approach," European Journal of Political Economy, Elsevier, vol. 79(C).
    3. Liedong, Tahiru Azaaviele & Aghanya, Daniel & Jimenez, Alfredo & Rajwani, Tazeeb, 2023. "Corporate political activity and bribery in Africa: Do internet penetration and foreign ownership matter?," Journal of Business Research, Elsevier, vol. 154(C).
    4. Bong Hwan Kim, 2018. "Is Narcissism Sustainable in CEO Leadership of State-Owned Enterprises?," Sustainability, MDPI, vol. 10(7), pages 1-13, July.
    5. Yu Tu & Benhong Peng & Ehsan Elahi & Weiku Wu, 2020. "Initiator or Intermediary? A Case Study on Network Relation of Environmental Regulatory Capture in China," IJERPH, MDPI, vol. 17(24), pages 1-19, December.
    6. Cheng, Bo & Christensen, Tom & Ma, Liang & Yu, Junli, 2021. "Does public money drive out private? Evidence from government regulations of industrial overcapacity governance in urban China," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 767-780.

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