Singapore government-linked Companies vs. non-government-linked companies : is there a performance differential?

• Main Authors: Ang, Clement Yong Keong, Goh, Gerald Wencong, Ho, Ashley Zhi Xuan
• Other Authors: Chia Wai Mun
• Format: Final Year Project
• Language: English
• Published: Nanyang Technological University 2022
• Subjects: Social sciences::Economic theory; Business::Finance::Corporate finance
• Online Access: https://hdl.handle.net/10356/156122
• Institution: Nanyang Technological University

Studies have shown that state-owned enterprises (SOEs) are influential and important contributors to world economies today, playing a key role in jump-starting large-scale industrialization and economic evolution. However, a prevalent criticism against SOEs is the fact that their performance can often be hindered by governance challenges that hamper the enterprise's ability to create value, perform efficiently, and contribute to economic development. Thus, our paper aims to contribute to the dated and limited literature regarding the performance differential between Singapore’s government linked corporations (GLCs) and non-government linked corporations (non-GLCs), with interest in periods of crisis. We employ a propensity score matching methodology (PSM) to match similar Singapore non-GLCs to their GLC counterparts due to the prevalent sample selection biases present in previous papers. Subsequently, using a sample of 535 companies in the Singapore Exchange, we adopt a pooled Ordinary Least Squares (OLS) approach in running the regressions. Sub-sample Difference-in-Difference (DID) regressions were also utilized to explore performance differentials during two crisis periods: the 2008 subprime mortgage crisis, and the 2020 Covid pandemic. Our results find no statistically significant difference in performances between GLCs and non-GLCs in Singapore, contrary to much of the literature in other parts of the world. This suggests Singapore GLCs were built to run on a competitive, commercial manner, with business practices that resemble private businesses.