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The Performance of State–Owned Enterprises Revisited
Author(s) -
Bozec Richard,
Breton Gaétan,
Côté Louise
Publication year - 2002
Publication title -
financial accountability and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.661
H-Index - 44
eISSN - 1468-0408
pISSN - 0267-4424
DOI - 10.1111/1468-0408.00158
Subject(s) - state owned , business , private enterprise , property rights , accounting , principal–agent problem , empirical research , sample (material) , agency (philosophy) , agency cost , quality (philosophy) , empirical evidence , public enterprise , profit (economics) , finance , corporate governance , industrial organization , economics , microeconomics , market economy , public administration , shareholder , philosophy , chemistry , epistemology , chromatography , political science
Many theoretical and empirical studies look at the ownership–performance relationship. So far, the literature in finance and in accounting mainly refers to the property rights, agency and public choice theories. Despite the fact that the results of these studies are more or less conclusive, it is usually considered that the private enterprise performs better than the state–owned enterprise. In this article, we argue that these studies suffer from one major limitation. They do not recognize that the goals of the state–owned enterprise are different from the ones espoused by the private firm. Using a sample of state–owned entreprises and private firms for the period 1976–1996, we present empirical evidence that the state–owned enterprises, when their main goal is to maximize profit, perform as well as the privately owned enterprises. Therefore, the alleged under–performance of the state–owned enterprises may only be the result of pursuing other goals while the poor quality of public managers may be another urban myth.