Review of Corporate Finance > Vol 1 > Issue 1-2

State Ownership and Debt Structure

Narjess Boubakri, American University of Sharjah, United Arab Emirates, , Ruiyuan Chen, West Virginia University, USA, , Sadok El Ghoul, University of Alberta, Canada, , Omrane Guedhami, University of South Carolina, USA,
Suggested Citation
Narjess Boubakri, Ruiyuan Chen, Sadok El Ghoul and Omrane Guedhami (2021), "State Ownership and Debt Structure", Review of Corporate Finance: Vol. 1: No. 1-2, pp 223-257.

Publication Date: 29 Apr 2021
© 2021 N. Boubakri, R. Chen, S. El Ghoul and O. Guedhami
Corporate finance
Privatizationgovernment/state ownershipdebt structureinstitutional environments


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In this article:
1. Introduction 
2. Hypothesis Development 
3. Data and Variables 
4. Results 
5. Conclusion 


We provide the first firm-level evidence of the relation between state ownership and debt structure. Using an international sample of newly privatized firms (NPFs) from 76 countries over the 1998– 2017 period, we find that state ownership is associated with a more diversified debt structure. This evidence is more pronounced for higher levels of state control, and is robust to accounting for endogeneity, using alternative samples, and controlling for other owner types. Additional analysis shows that our main evidence is consistent with the soft budget constraint, political, and social views of state ownership. Our results have several policy implications for financial system stability and the efficient allocation of financial resources in the economy.