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International Tax and Public Finance

, Volume 23, Issue 6, pp 1074–1092 | Cite as

State ownership and corruption

  • Steve Billon
  • Robert Gillanders
Article

Abstract

We test two interesting results that can be obtained from a simplified version of the theoretical model of Shleifer and Vishny (Q J Econ 109(4):995–1025, 1994) that studies bargaining between politicians and managers of state-owned firms. The model suggests that firms with more state ownership tend to pay less in bribes but not have a different experience of costly obstacles imposed on them by politicians. In our full sample, the results suggest that a one percentage increase in state ownership is associated with a $125 reduction in the total annual informal payment of the firm and with a 0.5 % decrease in the probability that a firm will consider corruption to be an obstacle to their current operations. We refine these average relationships by splitting the sample by global region. Only in our Europe and Central Asia sample do we find strong evidence in support of the first result and again we find a significant effect of state ownership on obstacles.

Keywords

State ownership Corruption Privatisation Bribery 

JEL Classification

D73 G32 L32 L33 P31 

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.LaRGEUniversity of StrasbourgStrasbourg CedexFrance
  2. 2.Hanken School of EconomicsHelsinkiFinland

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