Corporatization in the public sector entails decentralizing the provision of public goods and services to more autonomous entities, including state-owned enterprises (SOEs). However, limited attention has been given to understanding if incumbents’ ideology shapes SOEs’ financial performance once they are established. We hypothesize that the more right leaning the incumbent, the greater the SOEs’ financial performance. Nevertheless, the effects of ideology may be nonlinear. Thus, we investigate whether the association of incumbents’ ideologies with SOEs’ financial performance is weaker when right-leaning incumbents’ parties display non-policy behaviors (e.g., by prioritizing electoral outcomes or office occupation). We analyze a 2018–2022 panel of 317 SOEs controlled by 27 subnational governments in Brazil, and results confirm our hypothesis. Our research contributes to scholarship on the drivers of public organizations’ financial performance and sheds light on the role of political contingencies.
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