Private benefits of public control: Evidence of political and economic benefits of state ownership

Although governments are the majority shareholders in many of the world's largest and most important firms, we know very little about the role of the state as majority shareholder and the potential agency conflicts that exist between the state (as controlling shareholder) and the minority shareholder in state-owned enterprises (SOEs). Our study provides new insights regarding the private benefits that may be captured when the state is dominant shareholder (what we refer to as the "private benefits of state control"). We define the private benefits of state control as the political, social, or personal advantages that the controlling politician may be able to extract from the SOE. We identify firm-level and institution-level factors that may impact the amount of the private benefits of state control and present evidence that the private benefits of state control affect economic decision-making. (C) 2017 Elsevier B.V. All rights reserved.