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    A Comprehensive Evaluation Framework on the Economic Performance of State-Owned Enterprises

    Taghizadeh-Hesary, Farhad; Yoshino, Naoyuki; Kim, Chul Ju; Mortha, Aline | May 2019
    Abstract
    State-owned enterprises (SOEs) play a key role in the economy of many countries. They are usually thought to be in charge of increasing social welfare. At the same time, their relatively low performance poses several problems, including slowing down economic growth. This effect is especially pronounced in countries where such firms represent a large share of the economy. Therefore, it is crucial for central governments to implement a comprehensive evaluation method to assess the performance of SOEs. Previous studies have offered many ways to evaluate their performance. By employing the principal component analysis technique and using data of 1,148 SOEs, mostly from European countries, our study aims at providing a more comprehensive framework for assessing SOE performance that includes various factors. We selected five factors: profitability, per capita productivity, per capita costs, debt due days, and solvency. The results of our empirical study show that solvency, per capita costs, and per employee productivity have more deterministic power over the success or failure of SOEs, compared to profitability. While profit making of SOEs is important, focusing on profitability as the solve assessment criterion will mislead policy makers, keeping in mind also that the nature of many SOEs is to generate social welfare and not profit.
    Citation
    Taghizadeh-Hesary, Farhad; Yoshino, Naoyuki; Kim, Chul Ju; Mortha, Aline. 2019. A Comprehensive Evaluation Framework on the Economic Performance of State-Owned Enterprises. © Asian Development Bank Institute. http://hdl.handle.net/11540/10209.
    Keywords
    Governance
    Good Governance
    Political Leadership
    Public Administration
    Business Ethics
    Governance
    Corporate Governance Reform
    Governance Approach
    Governance Quality
    Public Sector Projects
    Public Sector Reform
    Political Leadership
    Political Power
    Institutional Framework
    Government
    Government accounting
    Government
    Institutional Framework
    Public Administration
    Business Ethics
    Political Leadership
    Public enterprises
    Public finance
    Public enterprises
    Bureaucracy
    Cabinet system
    Common good
    Executive power
    Government
    Political obligation
    Public management
    Government accountability
    Transparency in government
    Political ethics
    Government spending policy
    Government services
    Democracy
    Democratization
    Elections
    Local government
    Government business enterprises
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    Citable URI
    http://hdl.handle.net/11540/10209
    Metadata
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    Author
    Taghizadeh-Hesary, Farhad
    Yoshino, Naoyuki
    Kim, Chul Ju
    Mortha, Aline
    Theme
    Governance
    Public Sector
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise