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Responding to Financial Crisis: The Rise of State Ownership and Implications for Firm Performance

Author

Listed:
  • Carney, Richard W.
  • Liu, Wai-Man (Raymond)
  • Ngo, Phong T. H.

Abstract

We examine changes to corporate ownership in nine East Asian countries following the 1997 Asian Financial Crisis. Countries with lower incomes and in which policy making involves greater transactions costs (i.e., veto points) have more firms with state ownership. Partial state ownership appears to be effective insurance against crisis. Firms with minority state ownership exhibit 5% (annualized) lower idiosyncratic volatility in the quarter of the Lehman Brothers collapse than firms with either no or dominant state ownership. Minority state-owned firms also enjoy a higher abnormal return of 3.7% and 6.1% in the two quarters following the collapse of Lehman Brothers.

Suggested Citation

  • Carney, Richard W. & Liu, Wai-Man (Raymond) & Ngo, Phong T. H., 2012. "Responding to Financial Crisis: The Rise of State Ownership and Implications for Firm Performance," MPRA Paper 43600, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43600
    as

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    File URL: https://mpra.ub.uni-muenchen.de/43600/1/MPRA_paper_43600.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    financial crisis; government ownership; veto players; insurance; corporate performance;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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