The impact of governments on the performance of state-owned enterprises : evidence from Norway : an empirical study of the government effect on the performance differential between state- and privately owned enterprises

Abstract

This thesis investigates how the performance differential between state-owned enterprises (SOEs) and privately owned enterprises (POEs) is affected by different governments. Theory suggests that through their ability to elect the Board of Directors, the government can influence corporate governance or even utilize SOEs as vehicles to promote political objectives. By using the performance differential as a measure of the extent of deviation from profit maximizing behavior, we compare governments prior to and after three elections in Norway. By examining these elections separately, the research robustness is increased. Historically, SOEs have not been selected randomly, and generally differ significantly from POEs. Consequently, we apply inverse probability of treatment weighting (IPTW) using propensity scores in order to construct a comparable control group. Using the weighted control group, we have utilized a difference-in-differences model specification to compare the governments. Visual inspections suggest that SOEs and the weighted POEs exhibit parallel trends prior to treatment and we resultantly argue that the results can be interpreted causally. The results show no evidence that any of the three government changes caused a significant change in the profitability of SOEs compared to POEs. The small treatment group contributes to big standard errors of the coefficients, making it unlikely that we would retrieve statistically robust results even if there actually existed a causal relationship.