Carolina Abate, Assia Elgouacem, Tomasz Kozluk, Jan Stráský, Cristiana Vitale, 07 July 2020

In response to the COVID-19 crisis, governments are taking equity stakes in financially distressed companies, potentially risking market distortions. Using micro-level evidence for OECD members, this column shows that in countries where state-owned enterprises are subject to the same market forces as their competitors, they perform on par with private firms. Additionally, it analyses OECD product market regulation indicators to gain insights into areas of corporate governance that would benefit from reforms. It recommends governments to impose strict recovery plans on the firms benefiting from state interventions, set clear conditions for exit from state ownership, and rely on independent advisors to ensure sound valuations of investments and divestments.

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