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The impact of governance structure on firm performance: An application to the German water distribution sector

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  • Ruester, Sophia
  • Zschille, Michael

Abstract

This paper investigates the impact of governance structure on firm performance (i.e., retail prices) using a database of 765 German water suppliers. Controlling for scale economies as well as technical and structural characteristics, we find that private sector participation is accompanied with higher retail prices. Furthermore, Eastern states on average feature higher prices mirroring significant investments during the past two decades as well as network over-dimension. Assuming that managers make strategic decisions (e.g., governance form) not randomly but rather decide based on expectations of how their choices affect future performance, we test for this self-selection applying a two-stage model.

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  • Ruester, Sophia & Zschille, Michael, 2010. "The impact of governance structure on firm performance: An application to the German water distribution sector," Utilities Policy, Elsevier, vol. 18(3), pages 154-162, September.
    • Handle: RePEc:eee:juipol:v:18:y:2010:i:3:p:154-162
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    Cited by:

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    9. Michael Zschille, 2016. "Cost Structure and Economies of Scale in German Water Supply," Discussion Papers of DIW Berlin 1576, DIW Berlin, German Institute for Economic Research.
    10. García-Valiñas, María de los Ángeles & González-Gómez, Francisco & Picazo-Tadeo, Andrés J., 2013. "Is the price of water for residential use related to provider ownership? Empirical evidence from Spain," Utilities Policy, Elsevier, vol. 24(C), pages 59-69.
    11. Molinos-Senante, María & Maziotis, Alexandros & Sala-Garrido, Ramón, 2020. "Changes in the total costs of the English and Welsh water and sewerage industry: The decomposed effect of price and quantity inputs on efficiency," Utilities Policy, Elsevier, vol. 66(C).
    12. Porcher, Simon, 2017. "The ‘hidden costs’ of water provision: New evidence from the relationship between contracting-out and price in French water public services," Utilities Policy, Elsevier, vol. 48(C), pages 166-175.
    13. García-Valiñas, Maria A. & Gonzales, Francisco & Suarez, Javier & Zaporozhets, Vera, 2015. "Private Sector Involvement in Water Services: Theoretical Foundations and Empirical Evidence," TSE Working Papers 15-590, Toulouse School of Economics (TSE).
    14. Fernando Antonio Perrone Pinheiro & José Roberto Ferreira Savoia & Claudio Felisoni de Angelo, 2016. "A Comparative Analysis of the Public and Private Water Supply and Sanitation Service Providers’ Work in Brazil," Brazilian Business Review, Fucape Business School, vol. 13(1), pages 115-136, January.
    15. Barbosa, Alexandro & Lima, Severino Cesário de & Brusca, Isabel, 2016. "Governance and efficiency in the Brazilian water utilities: A dynamic analysis in the process of universal access," Utilities Policy, Elsevier, vol. 43(PA), pages 82-96.
    16. Alberto Ruiz-Villaverde & Miguel A. García-Rubio, 2017. "Public Participation in European Water Management: from Theory to Practice," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(8), pages 2479-2495, June.
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