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Board Composition, Political Connections and Performance in State-Owned Enterprises

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  • Anna Menozzi
  • María Gutierrez Urtiaga
  • Davide Vannoni

Abstract

This paper analyses the effects of board composition on the behaviour and performance of a sample of 114 Italian local public utilities, for which information about 1630 directors during 1994-2004 has been collected. This period is particularly interesting because of the legal changes that forced many firms to alter their juridical form and allowed the entrance of private investors. We investigate whether board size and/or board composition do affect decisions about employment and how they ultimately impact on performance. Our main findings indicate that politically connected directors, representing the state or the local municipality, dominate boards of directors in the Italian public utilities in the period under investigation. Politically connected directors exert a positive and significant effect on employment, while they impact negatively on performance.

Suggested Citation

  • Anna Menozzi & María Gutierrez Urtiaga & Davide Vannoni, 2010. "Board Composition, Political Connections and Performance in State-Owned Enterprises," Carlo Alberto Notebooks 185, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:185
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    More about this item

    Keywords

    board size; board composition; politicians; local public utilities;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General

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