State ownership and debt choice: Evidence from privatization

Narjess Boubakri, Walid Saffar

Research output: Journal article publicationJournal articleAcademic researchpeer-review

9 Citations (Scopus)


Using a large sample of privatized firms, we find that state ownership is significantly positively associated with the use of bank debt financing, suggesting that privatized firms benefit from the soft budget constraint associated with state ownership. We further find that the relation is more pronounced in countries with high government ownership of banks, high corruption in bank lending, a left-oriented government, and a collectivist national culture, which provides additional support for the soft-budget-constraint view. Finally, in external validity tests, we find that state ownership affects other aspects of debt structure, such as debt maturity and debt security.

Original languageEnglish
Pages (from-to)1313-1346
Number of pages34
JournalJournal of Financial and Quantitative Analysis
Issue number3
Publication statusPublished - 1 Jun 2019
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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