By Sergei Guriev, Dean and Professor of Economics at the London Business School, together with Ralph De Haas and Alexander Stepanov

  April 15, 2025 — Journal of Corporate Finance, Vol. 93 (Journal Article)

ABSTRACT: Does state ownership hinder or help firms access credit? We use data on almost 4 million firms in 89 countries to study the relationship between state ownership and corporate leverage. Controlling for country-sector-year fixed effects and conventional firm-level determinants of leverage, we show that state ownership is robustly and negatively related to corporate leverage. This relationship holds across most of the firm-size distribution – with the important exception of the largest companies – and is stronger in countries with weak political and legal institutions. A panel data analysis of privatized firms and a comparison of privatized with matched control firms yield similar qualitative and quantitative effects of state ownership on leverage.

KEYWORDS: State Ownership; Privatization; Corporate Debt; State Banks

Read More: https://www.sciencedirect.com/science/article/abs/pii/S0929119925000501?dgcid=author