GOVERNMENT EFFECTIVENESS, CORRUPTION, AND DECISION-MAKING IN STATE-OWNED ENTERPRISES

The purpose of this study is to identify if there is a difference in decision making behavior of State-Owned Enterprises (SOEs) when exposed to different scenarios of corruption and government effectiveness. The research used the difference-in-differences technique with  96,114 observations of companies from 31 countries. The results obtained in this study exposed the differences in the behavior of SOEs when facing different scenarios, as proposed in the analytical framework. Thus, it is possible to say that SOEs located in countries of high levels of corruption may work differently, considering the levels of government effectiveness. In environments of high effectiveness, SOEs increase long-term expenditures, spending more and building a context where it is more difficult to perceive the diversion of funds. Issues of government effectiveness and corruption have been addressed, however, little attention has been paid to cross-country comparisons considering the effectiveness of governments and levels of corruption.