#4719. FACTORS DRIVING THE FINANCIAL PERFORMANCE OF STATE-OWNED ENTERPRISES IN AN EMERGING MARKET

July 2026publication date
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Journal’s subject area:
Business, Management and Accounting (all);
Management Science and Operations Research;
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Abstract:
The objective of this study was to provide a clear understanding of the combination of factors that influences the financial performance of state-owned enterprises (SOE) in South Africa. This would lay a good foundation for stakeholders to improve such performance. Furthermore, an analysis of the factors that hinder SOEs financial performance will help to alleviate the financial burden experienced by the government in funding these entities and enable policymakers to adopt strategies to strengthen their performance. Based on a sample of 33 commercial SOEs in South Africa, the study employed a multiple regression model, estimated using the Two-Step System-GMM estimator (Generalized method of moments). Main variables included financial performance and leverage. The results presented indicate that leverage, measured by long-term debt has a significant negative effect on the financial performance of SOEs. This study contributed new knowledge to the limited literature on capital structure and financial performance of SOEs. This study extended previous studies on capital structure and financial performance in developed and developing economies by estimating models using the two-step GMM.
Keywords:
capital structure; GMM; leverage; profitability; South Africa

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