State Ownership and Corruption

Steve Billon and Robert Gillanders

MPRA Paper from University Library of Munich, Germany

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.

Keywords: state ownership; corruption; privatisation; bribery (search for similar items in EconPapers)
JEL-codes: D73 G32 L32 L33 P31 (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-cwa and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: State ownership and corruption (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:55600

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