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Ownership, Regulation, and Managerial Monitoring in the Electric Utility Industry

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  • Geddes, R Richard

Abstract

This article addresses three issues. First, the sensitivity of managerial turnover in investor owned electric utilities to changes in owner and customer wealth is examined Accounting measures of firm performance, allowed returns, and changes in outputs are included. A logit model is estimated to test the hypothesis that managers in regulated utilities are monitored by owners on the basis of regulatory rent-seeking behavior, versus a "regulatory slack" hypothesis. The evidence: presented here suggests that there is slack with respect to owner wealth, but that changes in customer wealth are important in determining turnover. Second, government owned firms are included in the investigation of turnover and performance, and the rate of managerial turnover is compared. Third, because significant firm size effects were found, estimates of managerial turnover reported in the Journal of Political Economy were replicated. The inclusion of a firm size variable has important implications for the conclusions reported there. Copyright 1997 by the University of Chicago.

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  • Geddes, R Richard, 1997. "Ownership, Regulation, and Managerial Monitoring in the Electric Utility Industry," Journal of Law and Economics, University of Chicago Press, vol. 40(1), pages 261-288, April.
    • Handle: RePEc:ucp:jlawec:v:40:y:1997:i:1:p:261-88
    DOI: 10.1086/467373
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    Cited by:

    1. Francesc Trillas, 2004. "The structure of corporate ownership in privatized utilities," Investigaciones Economicas, Fundación SEPI, vol. 28(2), pages 257-284, May.
    2. Burks, Stephen V & Guy, Frederick & Maxwell, Benjamin, 2004. "7. Shifting Gears In The Corner Office: Deregulation And The Earnings Of Trucking Executives," Research in Transportation Economics, Elsevier, vol. 10(1), pages 137-164, January.
    3. Nancy L. Rose & Catherine Wolfram, 2000. "Regulating Executive Pay: Using the Tax Code to Influence CEO Compensation," NBER Working Papers 7842, National Bureau of Economic Research, Inc.
    4. Michael E. Sykuta, 2010. "Empirical Methods in Transaction Cost Economics," Chapters, in: Peter G. Klein & Michael E. Sykuta (ed.), The Elgar Companion to Transaction Cost Economics, chapter 16, Edward Elgar Publishing.
    5. Michael E. Bradbury & Jill Hooks, 2015. "Ownership and Performance in a Lightly Regulated Environment," Australian Accounting Review, CPA Australia, vol. 25(1), pages 100-112, March.
    6. Thadeu Gasparetto & Angel Barajas, 2022. "Wage Dispersion and Team Performance: The Moderation Role of Club Size," Journal of Sports Economics, , vol. 23(5), pages 548-566, June.
    7. Bertrand V. Quelin & Sandro Cabral & Sergio Lazzarini & Ilze Kivleniece, 2019. "The Private Scope in Public–Private Collaborations: An Institutional and Capability-Based Perspective," Organization Science, INFORMS, vol. 30(4), pages 831-846, July.

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