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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.

Suggested Citation

  • Bortolotti, Bernardo & Cambini, Carlo & Rondi, Laura, 2012. "Reluctant Regulation," MPRA Paper 48073, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:48073
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    Cited by:

    1. Potrafke, Niklas, 2017. "Partisan politics: The empirical evidence from OECD panel studies," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 712-750.
    2. Francisca Bremberger & Carlo Cambini & Klaus Gugler & Laura Rondi, 2013. "Dividend Policy in Regulated Firms," RSCAS Working Papers 2013/53, European University Institute.
    3. repec:bla:ecinqu:v:55:y:2017:i:1:p:281-304 is not listed on IDEAS
    4. repec:eee:juipol:v:50:y:2018:i:c:p:13-25 is not listed on IDEAS
    5. Marzano, Riccardo, 2015. "One more ride on the merry-go-round! Public ownership and delayed competition in local public services," Journal of Comparative Economics, Elsevier, vol. 43(4), pages 981-996.
    6. Mountain, Bruce, 2014. "Independent regulation of government-owned monopolies: An oxymoron? The case of electricity distribution in Australia," Utilities Policy, Elsevier, vol. 31(C), pages 188-196.
    7. Belloc, Filippo & Nicita, Antonio & Sepe, Simone M., 2014. "Disentangling liberalization and privatization policies: Is there a political trade-off?," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 1033-1051.
    8. repec:kap:decono:v:166:y:2018:i:1:d:10.1007_s10645-017-9310-y is not listed on IDEAS
    9. 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.

    More about this item

    Keywords

    Privatization; Regulatory Independence; Political Institutions; Firm Value;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General

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