The Government as a Shareholder: A Case from the U.S.

Abstract

We study a sample of U.S. corporations in which the federal government held between 35 percent and 100 percent of the outstanding common stock during and following World War II. We find that the firms experienced abnormally high turnover among corporate board members but that the tenure of senior management was relatively stable. We also find that the performance of the government-owned companies was not significantly different than private-sector firms in the same industry. We attribute this comparable performance of the government-controlled firms to monitoring mechanisms such as analyst valuation, tradeable shares and competitive product markets that are not normally associated with public ownership.

JEL Classification: H8