Political Investment Cycle of State-Owned Enterprises

62 Pages Posted: 15 Nov 2016 Last revised: 17 Apr 2019

See all articles by Qingyuan Li

Qingyuan Li

Wuhan University - School of Economics and Management

Chen Lin

The University of Hong Kong - Faculty of Business and Economics

Li Xu

Washington State University, Vancouver

Date Written: July 27, 2016

Abstract

Using a large panel of more than 140,000 state-owned enterprises (SOEs), this study examines SOEs’ investment behavior surrounding 82 national elections in 25 European countries between 2001 and 2015. We find that SOEs increase their corporate investment by about 29% of the sample average during national election years. This effect is more pronounced in fixed timing and closely contested elections. The effect is also stronger in countries with low institutional quality, more centralized political systems and state-controlled banking systems. In contrast, we find the matched non-SOEs decrease their corporate investment significantly during national election years. (JEL G18, G30, G32, E22)

Keywords: State-owned enterprises, Investment, Elections, State-owned banks, Political risks

JEL Classification: G18, G30, G32, E22

Suggested Citation

Li, Qingyuan and Lin, Chen and Xu, Li, Political Investment Cycle of State-Owned Enterprises (July 27, 2016). Available at SSRN: https://ssrn.com/abstract=2869529 or http://dx.doi.org/10.2139/ssrn.2869529

Qingyuan Li

Wuhan University - School of Economics and Management ( email )

Wu Han, Hu-Bai 430072
China

Chen Lin

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Li Xu (Contact Author)

Washington State University, Vancouver ( email )

14204 NE Salmon Creek Avenue
Vancouver, WA WA 98686-9600
United States

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