Kapitalizm państwowy. Wpływ akcjonariusza państwowego na inwestycje przedsiębiorstw w Unii Europejskiej

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The impact of state ownership on corporate investment: Evidence from European Union

The phenomenon of state capitalism and SOEs(State-Owned Enterprise) in the global economy have been steadily growing in the last two decades (The Economist, 2022a). The way the state intervenes in the economy is also changing. In the case of European companies, it can be assumed that the increase in the number of SOEs may be a direct result of the crises and shocks that affected the European Union (Megginson, 2017). In the years 2007–2021, these were: “global financial crisis,” “Irish crisis,” “Southern crisis,” COVID-19 pandemic or war in Ukraine. With regard to the European Union, SOE’s investment activity does not seem to be as important as in the case of the highly centralized and state-dependent Chinese market. Nevertheless, among the 50 largest companies listed on organized markets in the EU, as many as 16.0% have more than 10% share of the state shareholder. The impact of the state shareholder on the corporate investment is also interesting in the context of the diverse economic structure of the EU, which consists of the countries of the Western Europe and the countries of the former Eastern Bloc (which have been operating as capitalist economies for a relatively short time).

The differences in the goals and motives of private enterprises (hereinafter: POE – Privately Owned Enterprise) and SOE enterprisesare confirmed by the extensive theoretical and empirical literature. The subject of differences between a private and a state shareholder was dealt with, among others, by Alchian (1965), who pointed out that state assets, compared to private assets, are characterized by the dispersion of ownership rights to property. In a situation where all citizens are the owner, de facto no one is. The potentially reduced effectiveness of SOE corporate governance mechanisms, caused by the influence of many, often conflicting, political interests and complex supervision structures – involving many state institutions and agencies – was pointed outby Sappington and Stiglitz (1987) or Borisova et al. (2012). Motivations of the owner associated with the state treasury other than value creation were discussedby Levy (1987), Allesi (1983), Sheifer and Vishny (1997), Berglof and Roland (1998) and Megginson and Nettle (2001). Boycko et al. (1996) emphasize that the issues of conflict of interest raised in the framework of agency theory in the context of SOE concern the actions of politicians rather than managers.

The analysis of the impact of the state shareholder on SOE investment decisions has become the subject of numerous empirical studies (among others: Chen et al., 2011; Firth et al., 2012; Lin and Bo, 2012; Bai and Lian, 2013; Wang et al., 2014; Jiang and Zeng, 2014; O’Toole et al., 2016; An et al., 2016; Chen et al., 2017a; Chen et al., 2017b; Jaslowitzer et al., 2018; Boubakri et al., 2018). Many studies have highlighted significant differences in how SOEs and POEs invest. In some cases, researchers confirmed that SOEs invest excessively or inefficiently, which is justified by the achievement of social and political goals (Chen et al., 2011; Bai and Lian, 2013; O’Toole et al., 2016; Jaslowitzer et al., 2018). Some authors also confirm that SOE investments are subject to financial constraints other than POE, pointing, for example, to the phenomenon of “Soft Budget Constraints” (Firth et al., 2012; Jiang and Zeng, 2014; Jaslowitzer et al., 2018; Zhang et al., 2020). However, it should be noted that the vast majority of these works characterize the Chinese market – strongly associated with the phenomenon of state capitalism (Chen et al., 2011).

The main purpose of this paper was to answer the question whether in the case of companies located in the European Union there are differences between SOE (State-Owned Enterprise) and POE (Privately Owned Enterprise) in terms of the level of the investment rate and its determinants. For the purpose of verifying the research objective of the dissertation, three main hypotheses and eight auxiliary hypotheses were formulated:Hypothesis 1: There are differences in average investment rates between SOE and POE; Hypothesis 2: The SOE investment rate depends to a lesser extent on growth opportunities, as measured by Tobin’s Q, than the POE investment rate; Hypothesis 3 There are differences between SOE and POE in terms of the relationship between the rate of investment and selected measures of financial constraints.

The research sample selected for the purpose of the empirical study covered companies located in the EU27 countries and observations from the period 2014–2021. Data sample consisted of the experimental group “SOE” (747 observations, 105 companies) and the matched control group “POE” (701 observations, 100 companies). Financial data and information on the companies’ shareholding structure were obtained from the BvD Orbis database.

The general investment rate model (excluding SOE / POE differentiation) developed for the study confirmed the predictions of key investment theories. This is a strong premise to conclude that the selection of the research sample as well as the tools and methods was appropriate. However, the results of the analyses taking into account the variables responsible for the differences between SOE and POE in the investment rate model allow to conclude that there are grounds for rejecting all three research hypotheses. This means that no statistically significant differences were found between SOE and POE in the data sample in terms of the level of the investment rate, as well as in terms of the relationship between the investment rate and investment determinants. This may prove that in European Union, SOEs invest in a manner similar to POE. The results regarding the first hypothesis are consistent with the findings of Lin and Bo (2012) and Jaslowizzer et al. (2018). However, the results contradict most of the work that states that SOE invests more on average than POE (Chen et al., 2011; Firth et al., 2012; Bai and Lian, 2013; An et al., 2016; Chen et al., 2017a). It should be noted that these studies were carried out on the Chinese market, where the “majority” model of state capitalism prevails. The results of the verification of the second hypothesis are not consistent with most of the identified empirical studies, including those carried out on the European market (Chen et al., 2011; Bai and Lian, 2013; Chen et al., 2017a; Chen et al., 2017b; Jaslowitzer et al., 2018). On the other hand, conclusions similar to those presented in the dissertation are presented by O’Toole et al. (2016). With regard to the third hypothesis, the results obtained in this study are also inconsistent with most of the analysed works by other authors. Different conclusions can be found among the identified research: some authors indicate that SOE investments are subject to greater financial constraints (Chen et al., 2011; Lin and Bo, 2012; Jiang and Zeng, 2014; Jaslowitzer et al., 2018), while others prove the opposite relationship (Bai and Lian, 2013; Zhang et al., 2020). Conclusions somewhat similar to those presented in this study are reached by Firth et al. (2012). When comparing the results obtained in this study with other empirical studies, it should be remembered that, with the exception of the study by Jaslowitzer et al. (2018) other works concerned markets other than Europe (the vast majority concerned the Chinese market) and covered earlier research periods.

The rejection of research hypotheses is not surprising. There are at least several possible justifications for the obtained results. First of all, attention should be paid to the limitations of this study, which result from the characteristics of the research sample. The matched sample created for the study is relatively small (205 companies in total) and includes only companies listed on regulated markets where the state shareholder is not the sole owner. As Szarzec et al. (2021a) the number of SOEs in Europe including unlisted companies is much higher than the one included in this study.

The companies qualified for the research sample are among the largest non-financial enterprises in the European Union. Many of the SOEs included in the sample are entities competing globally (for example: Volkswagen, Orange or Safran). Due to their scale and strategic importance, they play an important role in creating the economic environment and must comply with the requirements imposed on them by the capital market and other stakeholders. The research sample does not include unlisted SOEs, which do not have to comply with the disclosure obligations of listed companies and in the case of which the state shareholdermay be the sole owner and thus have unlimited influence on investment decisions. Therefore, the obtained results should be interpreted taking into account the above-mentioned limitations of the research sample.

In addition to the limitations of the research sample, the explanation of the results obtained may come from minority variant of the state capitalism model that exists in the EU (Musacchio and Lazzarini, 2014). In the minority model, the state shareholder often acts as a significant but non-dominant owner. The state has absolute control only in some of the observed SOEs (this applies to about 35% of SOE observations). As a result, the non-controlling state shareholder agrees to SOEs pursuing purely economic goals, identical or similar to those of POE.

The assumption that the control group (POE) always make their investment decisions based only on economic premises to maximize shareholders value also seems unrealistic. POEs are not free from agency or information asymmetry problems that can influence their investment decisions. The pressure of the capital markets and investors may also affect the actions of POE managers, often leading to “earnings management,” which may affect not only the way of financial reporting but also business decisions and indirectly affect cash flows (Kałdoński et al., 2020).

It is also possible that the state ownership in the largest companies in Europe could have resulted from the need to protect entities of particular importance for the national or regional economic environment. This could mean that in EU, the state as a shareholder may play a protective role in the SOE and not necessarily influence the current decisions of the SOE. With such a justification, the State shareholder would behave in a manner similar to that of a private shareholder, except in crisis situations where the State may be more motivated by social objectives (such as protecting strategic sectors of the economy or protecting jobs, for example). This may prove that EU countries have strong state institutions and a high level of effective investor protection tools (LaPorta et al., 1999).

The results of the study confirm the heterogeneity of the state capitalism phenomenon and may contribute to the discussion on the role and influence of the state shareholder on the investment decisions of enterprises. The subject matter discussed in this dissertation may be important for the creation of mechanisms that would enforce transparent operation of management boards as well as fair treatment of minority shareholders. In this context, understanding the differences in decision-making between SOEs and POEs (whether they exist or not) may be of particular importance to economic policy makers, private investors and managers.