Title

Government Ownership and the Performance of Government-Linked Companies: The Case of Singapore

Publication Type

Journal Article

Publication Date

2006

Abstract

In an emerging economy, the alternative to government control is often no governance. We investigate the governance structure of government-linked companies (GLCs) in Singapore under the ownership/control structure of Temasek Holdings, the government holding entity, which typically owns substantial cash flow rights but disproportional control rights and exercises no operational control. We compare the financial and market performance of GLCs with non-GLCs, where each has a different set of governance structure, the key difference being government ownership. We show that Singaporean GLCs have higher valuations and better corporate governance than a control group of non-GLCs. The results hold even when we control for firm specific characteristics such as profitability, leverage, firm size, and foreign ownership.

Discipline

Business

Research Areas

Finance

Publication

Journal of Multinational Financial Management

Volume

16

Issue

1

First Page

64

Last Page

88

ISSN

1042-444X

Identifier

10.1016/j.mulfin.2005.04.010

Publisher

Elsevier