2.1 Análisis del ambiente a controlar
2.1.1 Temperatura confort en un departamento
This dissertation investigates the role of state ownership in three related essays. All three essays examine state ownership in the context of privatization. Specifically, the first essay investigates the impact of state ownership on corporate cash holding. The second one assesses how state ownership influences firms’ liquidity and valuation. The third essay examines the relation between state ownership and trade credit. The robust findings of three essays add to the literature of privatization, state ownership, and corporate finance.
The first essay in Chapter 2 investigates the impact of state ownership on corporate cash holding. Using a unique sample of newly privatized firms from 59 countries, this study provides new evidence about the agency costs of state ownership and new insight into the corporate governance role of country-level institutions. Consistent with agency theory, we find strong and robust evidence that state ownership is positively related to corporate cash holdings. Moreover, we find that the strength of country-level institutions affects the relation between state ownership and the value of cash holdings. In particular, as state ownership increases, markets discount the value of cash holdings more in countries with weaker institutions.
This essay makes an important contribution to the privatization literature. Extant research [summarized in Megginson and Netter (2001)] generally identifies significant
improvements in the financial and operating performance of NPFs. However, there is limited empirical evidence on the sources of these improvements. Our paper extends this literature by providing preliminary insight into the sources of the performance improvements of NPFs. As we previously noted, the financial and operating performance of SOEs can be reduced by state misappropriation of corporate resources (i.e., the agency costs of state ownership). Privatization should mitigate such costs. One area where a reduction in the agency costs of state ownership could be directly measured is a firm’s cash management policies. Specifically, since cash is the most liquid asset, Caprio, Faccio, and McConnell (2013), Kusnadi et al. (2015), and Myers and Rajan (1998) argue that cash is most vulnerable to political extraction. Therefore, cash is an especially tempting target for state expropriation. Because privatization should dampen that temptation, one source of performance improvement following privatization is likely to be an increase in the value of cash holdings. By documenting that the value of cash holdings increases as residual state ownership decreases, we provide evidence of a direct source of the value accretion associated with privatization.
Further, since we examine cash holdings across a large sample of institutionally diverse countries, our study provides interesting evidence regarding the effect of the institutional environment on financial decision-making. We know that institutions matter. In this essay, we attempt to shed light on which institutions matter more and why certain institutions may matter more under certain circumstances.
The second essay, in Chapter 3, investigates the impact of state ownership on liquidity and valuation. Using a unique sample of 478 newly privatized firms (NPFs) from 54 countries over the period 1994–2014, we examine the relation between state ownership, stock market liquidity, and firm value. We first find that NPFs, on average, are more liquid than other listed firms. However, partially privatized firms are more liquid than fully privatized counterparts. Both of these results suggest a non-linear relation between state ownership and stock liquidity. We find empirical support for this conjecture and the soft budget constraint associated with state ownership. We further find that the relation between state ownership and liquidity is stronger in countries with higher levels of state ownership of banks, and is weaker in countries with fewer limits on foreign banks and little or no political influence as measured by the independence of the supervisory authority. Finally, we show that stock liquidity is related to firm value and cost of equity capital, suggesting that liquidity is a channel through which residual state ownership in NPFs affects valuation. This essay makes several contributions to the literature. First, our results are related to the literature on the effects of privatization on financial market development [see Megginson (2005, 2016) for an excellent survey]. This essay complements previous country-level studies (e.g., Boutchkova and Megginson, 2000; Bortolotti et al., 2007) by using firm-level liquidity measures to show that state ownership affects liquidity in a nonlinear fashion. In addition, we examine one channel through which state ownership affects cost of capital and thus firm value and find that superior access to state-owned banks,
which leads to soft budget constraints, explains the high stock liquidity in NPFs. Second, we contribute to the literature on the link between ownership structure and liquidity by focusing on a particular stakeholder, the State. As one of the most important large shareholders, the state is not only related to poor corporate governance, but is also unique, compared to other blockholders, in terms of soft budget constraint. We show that state ownership is associated with high stock liquidity, in particular during the financial crisis. Third, we further add to the privatization literature by showing how the distortion between economic and political/social objectives associated with state ownership plays out in determining stock liquidity.
This essay has policy implications related to the process of privatization: the evidence that high residual ownership decreases liquidity suggests that continued ownership is suboptimal. Of particular interest, we show that the benefits of privatization disappear at high levels of state ownership suggesting that, as argued by Megginson (2016), the links with government should be severed for positive outcomes to materialize. The economic distortions introduced by state ownership can be very costly to the economy when governments dominate as owners and market players.
The third essay, in Chapter 4, investigates the relation between state ownership and trade credit. Using a unique sample of 552 firms privatized in 60 countries, we find strong evidence that state ownership is positively associated with trade credit. This positive relation between state ownership and trade credit is stronger in countries with poorly
developed financial markets, suggesting that implicit borrowing in forms of trade credit from state-owned enterprises provides an alternative source of funds for firms with little access to finance. Contrary to the price discrimination theory, which predicts that firms extend trade credit to extract marginal profit, we find that state ownership is more likely to provide trade credit in competitive industries. Moreover, we find that the market discounts the value of trade credit in the presence of state ownership.
This essay contributes to the privatization literature in several ways. First, prior literature provides evidence on how state ownership in NPFs is associated with financial and operating performance after privatization. However, there is little evidence on how post-privatization state ownership affects firms along the supply chain of the NPFs. This essay extends this literature by providing preliminary insights on this issue. Second, the findings of how state ownership facilitates reallocating funds through trade credit in countries with a weak financial market extend our understanding of privatization. In particular, our results suggest that a gradual reduction of state ownership is recommended in countries without a well-established financial market. Firms along the supply chain of the NPFs are likely to experience a dramatic shock in financing if both trade credit and external financing are no longer in place. Further, this essay contributes to the trade credit literature by showing that ownership is one of the key determinants of trade credit. We shed light on how ownership structure is associated with different incentives to provide
trade credit. By considering the impact of state ownership, we broaden our understanding of how ownership structure affects the supply of trade credit.
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