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The value of government ownership during the global financial crisis

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  • Beuselinck, Christof
  • Cao, Lihong
  • Deloof, Marc
  • Xia, Xinping

Abstract

This paper examines the value of government ownership in Europe during the global financial crisis. This crisis was an exogenous shock for European firms, which allows us to observe an out-of-equilibrium effect on the costs and benefits of government ownership. Using a comprehensive sample of 4737 listed firms in 28 European countries over the period 2005–2009, we find that firms with government ownership experienced a smaller reduction in firm value than firms without government ownership. This effect was driven by firms located in countries where the risk of expropriation by the government is lower, that is, countries with less corruption and better investor protection.

Suggested Citation

  • Beuselinck, Christof & Cao, Lihong & Deloof, Marc & Xia, Xinping, 2017. "The value of government ownership during the global financial crisis," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 481-493.
  • Handle: RePEc:eee:corfin:v:42:y:2017:i:c:p:481-493
    DOI: 10.1016/j.jcorpfin.2015.05.002
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    2. repec:eee:corfin:v:46:y:2017:i:c:p:232-247 is not listed on IDEAS
    3. repec:eee:corfin:v:46:y:2017:i:c:p:261-283 is not listed on IDEAS
    4. Ichiro Iwasaki & Satoshi Mizobata & Alexander Muravyev, 2018. "Ownership dynamics and firm performance in an emerging economy: a meta-analysis of the Russian literature," Post-Communist Economies, Taylor & Francis Journals, vol. 30(3), pages 290-333, May.
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    More about this item

    Keywords

    Government ownership; Global financial crisis; Firm value; Institutional quality; Europe;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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