Institutional quality, investment efficiency, and the choice of public–private partnerships

We examine a sample of 625 public–private partnership (PPP) firms from 1980 to 2015 that straddle nine countries with varying degrees of economic development and PPP markets. We find that the motivations of the firms that undertake PPP investments vary. While private sector firms in economies with l...

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Bibliographic Details
Published inAccounting and finance (Parkville) Vol. 60; no. 2; pp. 1801 - 1834
Main Authors Dao, Nhung Hong, Marisetty, Vijaya Bhaskar, Shi, Jing, Tan, Monica
Format Journal Article
LanguageEnglish
Published Clayton Blackwell Publishing Ltd 01.06.2020
Subjects
Developing countries
Institutional quality
Investment–cash flow sensitivity
LDCs
Public private partnerships
Site planning
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Summary:We examine a sample of 625 public–private partnership (PPP) firms from 1980 to 2015 that straddle nine countries with varying degrees of economic development and PPP markets. We find that the motivations of the firms that undertake PPP investments vary. While private sector firms in economies with low institutional quality choose to engage in PPPs to alleviate capital constraints attributed to underinvestment, those in economies with high institutional quality participate in PPPs to solve the problem of overinvestment due to an abundant cash flow. In the long run, the benefits of lower capital constraints through PPP investments are more pronounced in economies with high institutional quality.
ISSN:0810-5391
1467-629X
DOI:10.1111/acfi.12514