Governmental Effectiveness: Analysis of State-Owned Enterprises Investments

Abstract

Objective: analyze the relationship between the effectiveness of the government and the investments made by state-owned enterprises. Method: this study makes use of a quasi-experiment using the Difference-in-Differences technique. The variables used to analyze the investments were: Increase in Investments, Number of Employees, Intangible Assets, Short-Term Investment and Return on Investments. Originality/Relevance: little attention was paid to comparisons between countries regarding government effectiveness, and no studies addressing the relationship between government effectiveness and state-owned enterprise investments were found. Results: companies with the government as the majority shareholder only invest more in relation to private companies when they are in environments with low government effectiveness. Theoretical/Methodological contributions: in theoretical terms, the research addressed a new perspective that may be crucial in explaining state-owned enterprise investments: the effectiveness of government. The main methodological contribution was the use of a comparative study on government effectiveness (in terms of using multiple measures and the analysis of many countries).