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

  • Anna Menozzi

    ()

    (Department of Business Management and Environment, University of Eastern Piedmont)

  • María Gutiérrez Urtiaga

    ()

    (Departamento de Economía de la Impresa, Universidad Carlos III de Madrid)

  • Davide Vannoni

    ()

    (Department of Economics and Public Finance "G. Prato", University of Torino)

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.

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File URL: http://web.econ.unito.it/prato/papers/n9.pdf
File Function: First version, 2010
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Paper provided by Former Department of Economics and Public Finance "G. Prato", University of Torino in its series Working papers with number 9.

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Length: 26 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:tur:wpaper:9
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Web page: http://eco83.econ.unito.it/prato/

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