IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/55600.html
   My bibliography  Save this paper

State Ownership and Corruption

Author

Listed:
  • Billon, Steve
  • Gillanders, Robert

Abstract

Using data from the World Bank's Enterprise Surveys, we test two interesting results that emerge from the theoretical model presented in Shleifer and Vishny (1994) that studies bargaining between politicians and managers of state-owned firms. Shleifer and Vishny's model suggests that firms with more state ownership should tend to pay less in bribes but not have a different experience of costly obstacles imposed on them by politicians. In our full sample, the results suggest that a one percent increase in state ownership is associated with a $125 reduction in the total annual informal payment of the firm and with a 0.5% decrease in the probability that a firm will consider corruption to be an obstacle to their current operations. We refine these average relationships somewhat by splitting the sample by global region. Only in our Europe and Central Asia sample do we find strong evidence in support of the first result and in this sample we find a signifcant effect of state ownership on obstacles. In our Sub-Saharan Africa and Latin America and Caribbean samples we do not find a significant effect on either corruption outcome.

Suggested Citation

  • Billon, Steve & Gillanders, Robert, 2014. "State Ownership and Corruption," MPRA Paper 55600, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:55600
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/55600/1/MPRA_paper_55600.pdf
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:hrv:faseco:33077889 is not listed on IDEAS
    2. Massimo Finocchiaro Castro & Calogero Guccio & Ilde Rizzo, 2014. "An assessment of the waste effects of corruption on infrastructure provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(4), pages 813-843, August.
    3. Jakob Svensson, 2003. "Who Must Pay Bribes and How Much? Evidence from a Cross Section of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 207-230.
    4. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
    5. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
    6. Cuneyt Koyuncu & Harun Ozturkler & Rasim Yilmaz, 2010. "Privatization and corruption in transition economies: a panel study," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 13(3), pages 277-284.
    7. G. Gulsun Arikan, 2008. "How Privatizations Affect the Level of Perceived Corruption," Public Finance Review, , vol. 36(6), pages 706-727, November.
    8. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
    9. Fan, C. Simon & Lin, Chen & Treisman, Daniel, 2009. "Political decentralization and corruption: Evidence from around the world," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 14-34, February.
    10. Nandini Gupta, 2005. "Partial Privatization and Firm Performance," Journal of Finance, American Finance Association, vol. 60(2), pages 987-1015, April.
    11. Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2009. "How do institutions affect corruption and the shadow economy?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(6), pages 773-796, December.
    12. Mohsin Habib & Leon Zurawicki, 2002. "Corruption and Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(2), pages 291-307, June.
    13. Michael Breen & Robert Gillanders, 2012. "Corruption, institutions and regulation," Economics of Governance, Springer, vol. 13(3), pages 263-285, September.
    14. Clarke, George R.G., 2011. "How Petty is Petty Corruption? Evidence from Firm Surveys in Africa," World Development, Elsevier, vol. 39(7), pages 1122-1132, July.
    15. Saul Estrin & Jan Hanousek & Evzen Kocenda & Jan Svejnar, 2009. "The Effects of Privatization and Ownership in Transition Economies," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 699-728, September.
    16. Christopher Ellis & John Fender, 2006. "Corruption and Transparency in a Growth Model," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(2), pages 115-149, May.
    17. Bjorvatn, Kjetil & Soreide, Tina, 2005. "Corruption and privatization," European Journal of Political Economy, Elsevier, vol. 21(4), pages 903-914, December.
    18. Narjess Boubakri & Jean-Claude Cosset & Houcem Smaoui, 2009. "Does Privatization Foster Changes In The Quality Of Legal Institutions?," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 32(2), pages 169-197.
    19. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    20. Bose, Niloy & Capasso, Salvatore & Murshid, Antu Panini, 2008. "Threshold Effects of Corruption: Theory and Evidence," World Development, Elsevier, vol. 36(7), pages 1173-1191, July.
    21. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
    22. Shang-Jin Wei, 2000. "Local Corruption and Global Capital Flows," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 303-354.
    23. Birdsall, Nancy & Nellis, John, 2003. "Winners and Losers: Assessing the Distributional Impact of Privatization," World Development, Elsevier, vol. 31(10), pages 1617-1633, October.
    24. Cuneyt Koyuncu & Harun Ozturkler & Rasim Yilmaz, 2010. "Privatization and corruption in transition economies: a panel study," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(3), pages 277-284.
    25. Robert Gillanders, 2014. "Corruption and Infrastructure at the Country and Regional Level," Journal of Development Studies, Taylor & Francis Journals, vol. 50(6), pages 803-819, June.
    26. Eckel, Catherine & Eckel, Doug & Singal, Vijay, 1997. "Privatization and efficiency: Industry effects of the sale of British Airways," Journal of Financial Economics, Elsevier, vol. 43(2), pages 275-298, February.
    27. Clarke, George R. G. & Xu, Lixin Colin, 2004. "Privatization, competition, and corruption: how characteristics of bribe takers and payers affect bribes to utilities," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2067-2097, August.
    28. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gillanders, Robert & Parviainen, Sinikka, 2014. "Experts’ Perceptions versus Firms’ Experiences of Corruption and Foreign Direct Investment," MPRA Paper 58991, University Library of Munich, Germany.
    2. Michael Breen & Robert Gillanders & Gemma Mcnulty & Akisato Suzuki, 2017. "Gender and Corruption in Business," Journal of Development Studies, Taylor & Francis Journals, vol. 53(9), pages 1486-1501, September.

    More about this item

    Keywords

    state ownership; corruption; privatisation; bribery;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • 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
    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:55600. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.