Investigating Soft Budget Constraints in a Transition Economy: The Case of Angolan Banks

다국어 초록 (Multilingual Abstract)

This study analyzes the effect of soft budget constraints from the perspective of firm ownership structure. The contribution of this study is that it analyzes soft budget constraints, firm value and ownership structure in a unified model, while previous studies have analyzed them independently. This integrated model gives us a better understanding of the impact channel of SBC on firm value. Using a sample of Angolan banks from 2015 to 2020, we find a significant negative relationship between government ownership and firm cash holdings, confirming the existence of soft budget constraints in Angolan banks. We also find a significant negative relationship between government ownership and firm value (Tobin's Q) and operating performance (ROE). In addition, we find that there is a significant positive relationship between institutional ownership and firm value. The result suggests that the monitoring function of external institutional investors can be effective even for firms in transition economies with high government ownership.

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