Note: Solvency ratio is measured as the shareholders’ funds over total assets. This variable is provided directly in the financial statements from ORBIS (BvD). The reference (excluded category) refers to Privately-owned Enterprises (POEs), so results should be interpreted as compared to private firms within the same sector, size, and age, and sector and controlling by the respective fixed effects. Firm size is measured as lagged values of the log of total workers (year t-1), age refers to the lagged number of years in the market in t-1. Listed status is a dichotomous variable that takes value 1 if the company is listed in the stock market, 0 otherwise. Fixed effects are included to absorb for potential shocks such as temporary shocks (year-FE), sectoral shocks (sector-FE), time-varying sectoral shocks (sector-year FE), country specific shocks (country-FE), country time varying events (country-year FE), and country and sector specific and time varying shocks (country-sector-year, FE). Clustered standard errors are used to control for potential autocorrelation within firms (column 9 to capture potential serial correlation) and sectors (column 10).

# **_6.1.4 Return on investments: ROA and ROE_**

Finally, we assess the return on investments measured by the return on assets (ROA) and returns on equity (ROE). ROE provides an assessment of the firm capability to generate value for their investors for each dollar in equity, while the ROA offers a comparison between the firm profitability and its assets. Results in Table 10 and Table 11 are indicative of a negative relationship between state ownership and the returns of the firm. On average, for every dollar in assets in a BOS firm, the return is about 4.9 percentage points lower than the median private peer in the same industry. BOSs’ returns on equity are approximately 15 percentage points lower compared to private peers. Results hold even after controlling by fixed effects and clustered-standard errors. These results showing a negative relationship between state participation and return on assets are consistent with former analysis by Phi et al., (2019) and Lin & Rowe (2006).

_Table 10. Results for Return on Assets (ROA)_

||||**_Return_**|**_on Assets_**||||||
|---|---|---|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|
|BOS|-4.992***|-4.939***|-4.905***|-4.901***|-4.882***|-5.001***|-4.986***|-4.986***|-4.986***|
||(0.042)|(0.044)|(0.044)|(0.044)|(0.044)|(0.046)|(0.046)|(0.074)|(0.123)|
|Size|-0.651***|-0.546***|-0.532***|-0.556***|-0.540***|-0.505***|-0.499***|-0.499***|-0.499***|
||(0.007)|(0.008)|(0.008)|(0.008)|(0.008)|(0.008)|(0.008)|(0.012)|(0.032)|
|Age||-0.065***|-0.065***|-0.065***|-0.065***|-0.076***|-0.076***|-0.076***|-0.076***|
|||(0.001)|(0.001)|(0.001)|(0.001)|(0.001)|(0.001)|(0.001)|(0.004)|
|Listing status|||-3.034***|-2.950***|-2.979***|-2.447***|-2.413***|-2.413***|-2.413***|
||||(0.100)|(0.100)|(0.100)|(0.107)|(0.107)|(0.183)|(0.176)|
|Constant|8.576***|9.158***|9.113***|9.191***|9.139***|9.176***|9.151***|9.151***|9.151***|
||(0.027)|(0.028)|(0.028)|(0.028)|(0.028)|(0.029)|(0.029)|(0.042)|(0.126)|
|Observations|6,576,325|6,428,898|6,428,898|6,428,898|6,428,883|6,428,815|6,422,117|6,422,117|6,422,117|
|R-squared|0.040|0.041|0.041|0.044|0.049|0.061|0.069|0.069|0.069|
|Country FE|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|Sector FE|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|Year FE|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|Country-year FE|No|No|No|Yes|Yes|Yes|Yes|Yes|Yes|
|Sector-Year FE|No|No|No|No|Yes|Yes|Yes|Yes|Yes|
|Country-Sector FE|No|No|No|No|No|Yes|Yes|Yes|Yes|
|Country-Sector-Year FE|No|No|No|No|No|No|Yes|Yes|Yes|
|Clustered errors|No|No|No|No|No|No|No|Firm|Sector 2d|

Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1 Note: Return on Assets (ROA) is computed as the ratio between net income and total assets *100 (%). This variable is provided directly in the financial statements from ORBIS (BvD). The reference (excluded category) refers to Privately-owned Enterprises (POEs), so results should be interpreted as compared to private firms within the same sector, size, and age, and sector and controlling by the respective fixed effects. Size is measured as the log of total workers in year t-1, age refers to the lagged number of years in the market in t-1. Listed status is a dichotomous variable that takes value 1 if the company is listed in the stock market, 0 otherwise. Fixed effects are included to absorb for potential shocks such as temporary shocks (year-FE), sectoral shocks (sector-FE), time-varying sectoral shocks (sector-year FE), country specific shocks (country-FE), 16