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

Nhung Hong Dao, Vijaya Bhaskar Marisetty, Jing Shi, Monica Tan

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1 Citation (Scopus)


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.

Original languageEnglish
Number of pages34
JournalAccounting and Finance
Publication statusE-pub ahead of print - 1 Aug 2019



  • Institutional quality
  • Investment–cash flow sensitivity
  • Public–private partnerships

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