State ownership and corporate leverage around the world

De Haas, Ralph, Guriev, SG and Stepanov, Alexander (2025) State ownership and corporate leverage around the world. Journal of Corporate Finance. p. 102782. ISSN 0929-1199 (In Press)

Abstract

Does state ownership hinder or help firms access credit? We use data on almost 4 million firms in 89 countries to study the relationship between state ownership and corporate leverage. Controlling for country-sector-year fixed effects and conventional firm-level determinants of leverage, we show that state ownership is robustly and negatively related to corporate leverage. This relationship holds across most of the firm-size distribution – with the important exception of the largest companies – and is stronger in countries with weak political and legal institutions. A panel data analysis of privatized firms and a comparison of privatized with matched control firms yield similar qualitative and quantitative effects of state ownership on leverage.