Performance of State-Owned Enterprises During Public Elections: The Case of Korea

State-owned enterprises (SOEs) pursue multiple goals to maximize public welfare. Therefore, governments must evaluate both their economic efficiency and their social effectiveness. However, government performance evaluation (GPE) of SOEs may be affected by political motives. This paper investigates whether SOEs are fairly evaluated by governments during political events. Using Korean data, we find no significant relation between public elections (presidential and national assembly elections) and the financial performance of SOEs. However, the GPE scores of SOEs are significantly lower in years in which a public election is held than in other years. In addition, the GPE of SOEs can be an important determinant of whether or not to replace CEOs. This research sheds light on the political use of the GPE for SOEs.