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Investment behavior and ownership structures in Ukraine: Soft budget constraints, government ownership and private benefits of control

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  • Mykhayliv, Dariya
  • Zauner, Klaus G.

Abstract

This paper analyzes the relationship between investment behavior of firms and ownership and corporate governance variables for a sample of large Ukrainian firms 2003–2007. The paper sheds light on the role of the ownership structures of firms and its effect on investment behavior via the presence of private benefits of control, financial and soft budget constraints. We find a negative impact of government ownership on investment and evidence for soft budget constraints. Foreign ownership is associated with financial constraints. Firms with management ownership do not appear to suffer from financial constraints. These and other findings demonstrate a significant role for private benefits of control consistent with the presented investment model that allows for private benefits of control and financial and soft budget constraints.

Suggested Citation

  • Mykhayliv, Dariya & Zauner, Klaus G., 2013. "Investment behavior and ownership structures in Ukraine: Soft budget constraints, government ownership and private benefits of control," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 265-278.
  • Handle: RePEc:eee:jcecon:v:41:y:2013:i:1:p:265-278
    DOI: 10.1016/j.jce.2012.03.001
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    Cited by:

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    2. Nagano, Mamoru, 2016. "The bank–firm relationship during economic transition: The impacts on bank performance in emerging economies," Emerging Markets Review, Elsevier, vol. 28(C), pages 117-139.
    3. Gauselmann, Andrea & Noth, Felix, 2015. "Corporate Governance Structures and Financial Constraints in Multinational Enterprises – An Analysis in Selected European Transition Economies on the Basis of the IWH FDI Micro Database 2013 –," IWH Discussion Papers 3/2015, Halle Institute for Economic Research (IWH).
    4. Grira, Jocelyn, 2020. "Back to government ownership: The Sovereign Wealth Funds phenomenon," Finance Research Letters, Elsevier, vol. 34(C).
    5. Črnigoj, Matjaž & Verbič, Miroslav, 2014. "Financial constraints and corporate investments during the current financial and economic crisis: The credit crunch and investment decisions of Slovenian firms," Economic Systems, Elsevier, vol. 38(4), pages 502-517.
    6. Kornai, János, 2014. "Bevezetés A puha költségvetési korlát című kötethez [Introduction to the author s volume entitled Soft Budget Constraint]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 845-897.
    7. Ichiro Iwasaki & Satoshi Mizobata, 2020. "Ownership Concentration and Firm Performance in European Emerging Economies: A Meta-Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(1), pages 32-67, January.
    8. Mykhayliv, Dariya & Zauner, Klaus G., 2017. "The impact of equity ownership groups on investment: Evidence from Ukraine," Economic Modelling, Elsevier, vol. 64(C), pages 20-25.

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    More about this item

    Keywords

    Corporate governance; Financial constraints; Investment; Private benefits of control; Ownership;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • L - Industrial Organization
    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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