2018/07/31 by Ruiyuan (Ryan) Chen, Ruiyuan Chen, Sadok El Ghoul +3 · 165 citations
Business, Management and Accounting · #Accounting #Agency (philosophy) #Agency cost #Business #Cash #Corporate Finance and Governance #Corporate governance #Economics #Emerging markets #Finance #Financial system #Monetary economics #Principal–agent problem #Private Equity and Venture Capital #Sample (material) #Shareholder #State (computer science) #State Capitalism and Financial Governance #State ownership #Value (mathematics)
paper · doi:10.1017/s0022109018000236
published in Journal of Financial and Quantitative Analysis 53(5), 2293-2334 (Cambridge University Press)
openalex publication_date 2018/07/31 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/25
Using a unique sample of newly privatized firms from 59 countries, this article 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.