Reluctant regulation

Bernardo Bortolotti; Carlo Cambini; Laura Rondi

doi:10.1016/j.jce.2012.12.003

Reluctant regulation

Bernardo Bortolotti, Carlo Cambini, Laura Rondi

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

We study the effect of state ownership on the market-to-book ratios of publicly traded European utilities from 1994 to 2005. We find that when the company is subject to independent regulation, state ownership seems positively associated with firm value. This relation tends to appear in countries where weak checks and balances and political fragmentation do not constrain the power of the executive. Our results suggest that, where political institutions are weak, politicians may influence regulatory agencies in order to benefit state-owned firms.

Original language	English (US)
Pages (from-to)	804-828
Number of pages	25
Journal	Journal of Comparative Economics
Volume	41
Issue number	3
DOIs	https://doi.org/10.1016/j.jce.2012.12.003
State	Published - Aug 2013

Keywords

Firm value
Political institutions
Privatization
Regulatory independence

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/j.jce.2012.12.003

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AB - We study the effect of state ownership on the market-to-book ratios of publicly traded European utilities from 1994 to 2005. We find that when the company is subject to independent regulation, state ownership seems positively associated with firm value. This relation tends to appear in countries where weak checks and balances and political fragmentation do not constrain the power of the executive. Our results suggest that, where political institutions are weak, politicians may influence regulatory agencies in order to benefit state-owned firms.

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