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Reluctant Regulation

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  • Bortolotti, Bernardo
  • Cambini, Carlo
  • Rondi, Laura

Abstract

We study the effect of state ownership on the market-to-book ratios of publicly traded European utilities observed from 1994 to 2005. We find that when the company is subject to independent regulation, state ownership is positively associated with firm value. This effect is strong and significant in countries where weak checks and balances and political fragmentation do not constrain the power of the executive. We conclude that where political institutions are weak, politicians imperfectly delegate powers to regulatory agencies in order to benefit state-owned firms.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 48073.

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Date of creation: Apr 2012
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Handle: RePEc:pra:mprapa:48073

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Keywords: Privatization; Regulatory Independence; Political Institutions; Firm Value;

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References

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Cited by:
  1. Francisca Bremberger & Carlo Cambini & Klaus Gugler & Laura Rondi, 2013. "Dividend Policy in Regulated Firms," RSCAS Working Papers 2013/53, European University Institute.
  2. Gugler, Klaus & Rammerstorfer, Margarethe & Schmitt, Stephan, 2013. "Ownership unbundling and investment in electricity markets — A cross country study," Energy Economics, Elsevier, vol. 40(C), pages 702-713.

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