State Ownership and Corruption Report as inadecuate

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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 ourfull 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 witha 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 strongevidence 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 Caribbeansamples we do not find a significant effect on either corruption outcome.

Item Type: MPRA Paper -

Original Title: State Ownership and Corruption-

Language: English-

Keywords: state ownership, corruption, privatisation, bribery-

Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; CorruptionG - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; GoodwillL - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L32 - Public Enterprises ; Public-Private EnterprisesL - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L33 - Comparison of Public and Private Enterprises and Nonprofit Institutions ; Privatization ; Contracting OutP - Economic Systems > P3 - Socialist Institutions and Their Transitions > P31 - Socialist Enterprises and Their Transitions-

Author: Billon, Steve


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