The Financial Sustainability of State-Owned Enterprises in an Emerging Economy
When the government creates state-owned enterprises (SOEs), one of the primary purposes is to reduce its financial burden in the long run, also called financial sustainability. Nonetheless, previous research has pointed out that SOEs struggle to achieve financial sustainability due to government int...
| Main Authors: | , , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2022-09-01
|
| Series: | Economies |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2227-7099/10/10/233 |
| _version_ | 1797473677643612160 |
|---|---|
| author | Chee Loong Lee Riayati Ahmad Wing Shing Lee Norlin Khalid Zulkefly Abdul Karim |
| author_facet | Chee Loong Lee Riayati Ahmad Wing Shing Lee Norlin Khalid Zulkefly Abdul Karim |
| author_sort | Chee Loong Lee |
| collection | DOAJ |
| description | When the government creates state-owned enterprises (SOEs), one of the primary purposes is to reduce its financial burden in the long run, also called financial sustainability. Nonetheless, previous research has pointed out that SOEs struggle to achieve financial sustainability due to government intervention. In this study, we examine the relationship between the financial sustainability of SOEs and government intervention in Malaysia. We take a novel approach, using share ownership to measure government intervention. Our results show that the threshold effect of government ownership on financial sustainability in Malaysia is around 27%. The findings prove that the SOEs of an emerging country could reach financial sustainability only if the government ownership is below the threshold. Finally, this study discusses the policy implications of our findings for SOEs. The government of Malaysia should propose a road map to gradually reduce its ownership of SOEs below the threshold. |
| first_indexed | 2024-03-09T20:20:48Z |
| format | Article |
| id | doaj.art-d16793214098423d842ecc01bd488e57 |
| institution | Directory Open Access Journal |
| issn | 2227-7099 |
| language | English |
| last_indexed | 2024-03-09T20:20:48Z |
| publishDate | 2022-09-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Economies |
| spelling | doaj.art-d16793214098423d842ecc01bd488e572023-11-23T23:50:17ZengMDPI AGEconomies2227-70992022-09-01101023310.3390/economies10100233The Financial Sustainability of State-Owned Enterprises in an Emerging EconomyChee Loong Lee0Riayati Ahmad1Wing Shing Lee2Norlin Khalid3Zulkefly Abdul Karim4Center for Sustainable and Inclusive Development Studies (SID), Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), Bangi 43600, Selangor, MalaysiaCenter for Sustainable and Inclusive Development Studies (SID), Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), Bangi 43600, Selangor, MalaysiaDepartment of International Business and Administration, I-Shou University, Dashu District, Kaohsiung City 840001, TaiwanCenter for Sustainable and Inclusive Development Studies (SID), Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), Bangi 43600, Selangor, MalaysiaCenter for Sustainable and Inclusive Development Studies (SID), Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), Bangi 43600, Selangor, MalaysiaWhen the government creates state-owned enterprises (SOEs), one of the primary purposes is to reduce its financial burden in the long run, also called financial sustainability. Nonetheless, previous research has pointed out that SOEs struggle to achieve financial sustainability due to government intervention. In this study, we examine the relationship between the financial sustainability of SOEs and government intervention in Malaysia. We take a novel approach, using share ownership to measure government intervention. Our results show that the threshold effect of government ownership on financial sustainability in Malaysia is around 27%. The findings prove that the SOEs of an emerging country could reach financial sustainability only if the government ownership is below the threshold. Finally, this study discusses the policy implications of our findings for SOEs. The government of Malaysia should propose a road map to gradually reduce its ownership of SOEs below the threshold.https://www.mdpi.com/2227-7099/10/10/233financial sustainabilitystate-owned enterprisesemerging economiesgovernment ownershipthreshold effect |
| spellingShingle | Chee Loong Lee Riayati Ahmad Wing Shing Lee Norlin Khalid Zulkefly Abdul Karim The Financial Sustainability of State-Owned Enterprises in an Emerging Economy Economies financial sustainability state-owned enterprises emerging economies government ownership threshold effect |
| title | The Financial Sustainability of State-Owned Enterprises in an Emerging Economy |
| title_full | The Financial Sustainability of State-Owned Enterprises in an Emerging Economy |
| title_fullStr | The Financial Sustainability of State-Owned Enterprises in an Emerging Economy |
| title_full_unstemmed | The Financial Sustainability of State-Owned Enterprises in an Emerging Economy |
| title_short | The Financial Sustainability of State-Owned Enterprises in an Emerging Economy |
| title_sort | financial sustainability of state owned enterprises in an emerging economy |
| topic | financial sustainability state-owned enterprises emerging economies government ownership threshold effect |
| url | https://www.mdpi.com/2227-7099/10/10/233 |
| work_keys_str_mv | AT cheeloonglee thefinancialsustainabilityofstateownedenterprisesinanemergingeconomy AT riayatiahmad thefinancialsustainabilityofstateownedenterprisesinanemergingeconomy AT wingshinglee thefinancialsustainabilityofstateownedenterprisesinanemergingeconomy AT norlinkhalid thefinancialsustainabilityofstateownedenterprisesinanemergingeconomy AT zulkeflyabdulkarim thefinancialsustainabilityofstateownedenterprisesinanemergingeconomy AT cheeloonglee financialsustainabilityofstateownedenterprisesinanemergingeconomy AT riayatiahmad financialsustainabilityofstateownedenterprisesinanemergingeconomy AT wingshinglee financialsustainabilityofstateownedenterprisesinanemergingeconomy AT norlinkhalid financialsustainabilityofstateownedenterprisesinanemergingeconomy AT zulkeflyabdulkarim financialsustainabilityofstateownedenterprisesinanemergingeconomy |