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The targets of state capitalism: evidence from M&A deals

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  • Clò, Stefano
  • Fiorio, Carlo V.
  • Florio, Massimo

Abstract

Over the last decade, particularly after the Great Recession, state-owned enterprises (SOEs) have been expanding their role in the global economy, including through merger & acquisitions (M&As). What are the characteristics of the firms targeted by SOEs? Are they different from firms controlled by private investors? By looking at a unique sample of around 25,000 M&As occurred over the period 2005–2012, we find that only SOEs controlled by means of minority of stakes (state-invested enterprises, SIEs) do not show any statistically significant difference in their targeting strategy compared to private enterprises. Conversely, majority-owned SOEs, and in particular financial SOEs buy lower performing firms compared to private acquirers. We interpret this fact as evidence of the internalization of political objectives by fully controlled and financial SOEs, but not by SIEs.

Suggested Citation

  • Clò, Stefano & Fiorio, Carlo V. & Florio, Massimo, 2017. "The targets of state capitalism: evidence from M&A deals," European Journal of Political Economy, Elsevier, vol. 47(C), pages 61-74.
  • Handle: RePEc:eee:poleco:v:47:y:2017:i:c:p:61-74
    DOI: 10.1016/j.ejpoleco.2016.12.005
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    4. Asmund Rygh & Gabriel R. G. Benito, 2022. "Governmental goals and the international strategies of state-owned multinational enterprises: a conceptual discussion," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(4), pages 1155-1181, December.
    5. Udichibarna Bose, 2023. "Does green transition promote green innovation and technological acquisitions?," Working Papers w202305, Banco de Portugal, Economics and Research Department.
    6. Castelnovo, Paolo & Del Bo, Chiara F. & Florio, Massimo, 2019. "Quality of institutions and productivity of State-Invested Enterprises: International evidence from major telecom companies," European Journal of Political Economy, Elsevier, vol. 58(C), pages 102-117.
    7. Andrea Orame & Daniele Pianeselli, 2023. "Thinking the green transition: evidence from the automotive industry," Questioni di Economia e Finanza (Occasional Papers) 767, Bank of Italy, Economic Research and International Relations Area.
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    10. Damioli, Giacomo & Gregori, Wildmer Daniel, 2023. "Diplomatic relations and cross-border investments in the European Union," European Journal of Political Economy, Elsevier, vol. 76(C).
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    More about this item

    Keywords

    L32; L33; G34; H82; State-owned enterprises; State-invested enterprises; Management inefficiency; Firms' performance; Worldwide mergers and acquisitions;
    All these keywords.

    JEL classification:

    • 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
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property

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