Should state-owned enterprises be privatized in developing countries? evidence from Brazil

• Autor(a) principal: Rafaela de Oliveira Vitoria
• Data de Publicação: 2022
• Tipo de documento: Tese
• Idioma: eng
• Título da fonte: Repositório Institucional da UFMG
• Texto Completo: http://hdl.handle.net/1843/43615
• topic: Privatization; State-owned enterprise; Corporate finance; Profitability; GMM; Empresas estatais; Privatização; Finanças corporativas

The rise and fall of state capitalism in Brazil have reopened the debate on privatization, a highly polarized topic in the country among economists and policy makers. This study investigated the effects of state ownership on firm performance, trough observable variables such as profitability, valuation, and labor efficiency using econometric models with panel data and dynamic models to control for endogeneity. The results showed that SOEs underperform privatized peers in almost all measures. State control has a significant negative impact on companies’ profitability, labor efficiency, and market values. The negative ownership performance relationship can be attributed to the ingrained political policies that abuse state resources and show no constraints, particularly in over employment. This study focused on the aggregate impact of SOEs, and not on their individual performances. The results can shed new light on the issue whether government participation in corporations is worthy as an economic public policy, and at what cost. Privatized entities’ performance demonstrate that companies are better managed, generate higher profits, invest more, and ultimately employ more people as they expand. For investors, it is clear that SOEs in Brazil underperform, and that fact is reflected in recurrent discounted market valuations despite the economic cycle or government orientation. Therefore, the privatization debate in Brazil can be enlightened with relevant information for policy makers.