When the State Harms Competition ― The Role for Competition Law

Fox, Eleanor M.; Healey, Deborah

doi:10.2139/ssrn.2248059

Cited by 7 publications

(9 citation statements)

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“…While this notion of funding coherently adapts to the assessment of publicness in organisations such as governmental agencies, it cannot be transferred to SOEs as such. Government appropriations to private organisations that operate in competitive markets are meticulously regulated—if not entirely forbidden—in many jurisdictions, as they alter the proper functioning of the market and undermine consumers’ rights (Fox & Healey, 2013 ). Considering this fact and the pertinence of this reasoning with our empirical setting, the funding dimension has not been included in the theoretical framework of this paper.…”

Section: Publicness In Soes: a Theoretical Framework And Hypotheses Buildingmentioning

confidence: 99%

Earnings management in state-owned enterprises: bringing publicness back in

2021

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Financial accountability is a major issue for State-owned Enterprises (SOEs) especially because of the large amount of public resources invested in them and the social relevance of their performance. In the awareness that the public interest is increasingly pursued in abstract arenas, the investigation of accounting should be anchored to conceptual rather than contextual spaces. Building on the dimensional concept of publicness, this paper investigates the impact of three publicness dimensions (ownership, political control, and goal ambiguity) on earnings management (EM) in SOEs, a managerial practice that affects the quality of financial accountability. Drawing on data from a sample of 1200 Italian SOEs, the conditional revenue model (Stubben, 2010) is used to estimate their EM during the period 2009–2017. These EM estimates are then regressed against dimensions of publicness. Findings show that publicness is either neutral or relevant for the quality of SOEs’ financial accountability, depending on the dimensions analysed: while ownership and financial control are positively related to EM in SOEs, administrative control and goal ambiguity are not statistically significant predictors of EM. Moreover, the interaction of publicness dimensions does not affect EM in SOEs. Therefore, this paper shows that SOEs’ publicness is either irrelevant or detrimental to the quality of SOEs’ financial accountability, depending on the dimension of publicness considered. Efforts should be made to define policies and governance arrangements able to influence managers’ behaviour in a way that preserves SOEs’ financial accountability.

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Section: Publicness In Soes: a Theoretical Framework And Hypotheses Buildingmentioning

confidence: 99%

Earnings management in state-owned enterprises: bringing publicness back in

2021

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“…Businesses with links to the State are prone to behaving anti-competitively (Fox & Healey 2014;Sappington & Sidak 2003). Because of their socio-economic (rather than economic efficiency) pursuits, SOEs are inclined towards expanding output and revenue but maximising profit is not high on their agenda (Sappington & Sidak 2003).…”

Section: Why Competition Law Matters?mentioning

confidence: 99%

“…Because of their socio-economic (rather than economic efficiency) pursuits, SOEs are inclined towards expanding output and revenue but maximising profit is not high on their agenda (Sappington & Sidak 2003). This creates an "incentive" for them to erect barriers in the market disadvantaging private competitors (Fox & Healey 2014). Nevertheless, not all instances of monopoly can be effectively addressed by competition law.…”

Section: Why Competition Law Matters?mentioning

confidence: 99%

“…As such, many argue that strategic sectors such as defence and finance should be exempted because opening them to private including foreign players can give rise to national security concerns. The costs of subjecting SOEs to competition law are far lesser than the costs that such law will bring particularly in terms of the reduced sovereign entitlements enjoyed States (Fox & Healey 2014). However, the experience in more developed jurisdictions particularly the European Union suggests that where the market is opened up even for the strategic sectors, the State benefits from the enhanced efficiency and innovation (Fox & Healey 2014).…”

Section: Why Competition Law Matters?mentioning

confidence: 99%

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State-Owned Enterprises, Market Competition and the Boundaries of Competition Law in Malaysia

2017

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This article examines the challenges and opportunities of subjecting Malaysian State-Owned Enterprises (SOEs) to its main competition legislation that is the Competition Act 2010. This article first highlights the nature of economic activities which is a crucial element in determining that an SOE actually participates in the market. Despite the contentions that SOEs have a unique character, and should be excluded from normal regulation of competition, this article argues that competition law is important in addressing the problems brought about by Government or State's involvements in businesses. This article finds that while the Competition Act 2010 does not apply a blanket exemption to SOEs, there are many hurdles in applying the law to them. Based on the literature analysis in the earlier part of this article, this article finds that some of these hurdles are justified especially if they are connected to the notion of natural monopoly. Where there are not connected, extending the check and balance mechanisms against the market activities of the SOEs will be crucial. This article shows that the avenues to realise it still exist but are limited.

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“…Further, in terms of reforms in SOEs, there are jurisdictions that are pretty aggressive while others explore softer ways and means to introduce reforms giving priority to their SOEs. Convergence in the application of competitive neutrality principles for reforming SOEs is very important, and in this world, with more than 130 competition law jurisdictions, the nurturing of common norms is an essential step in the process of nudging the world toward greater economic coherence (Fox and Healey 2014).…”

Section: Introducing 'Competitive Neutrality'mentioning

confidence: 99%

Reforming SOEs in Asia: Lessons from Competition Law and Policy in India

Singh¹

2019

SSRN Journal

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When the State Harms Competition ― The Role for Competition Law

Cited by 7 publications

References 0 publications

Earnings management in state-owned enterprises: bringing publicness back in

Earnings management in state-owned enterprises: bringing publicness back in

State-Owned Enterprises, Market Competition and the Boundaries of Competition Law in Malaysia

Reforming SOEs in Asia: Lessons from Competition Law and Policy in India

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