Public control and strategic governance in state-owned public utilities: empirical evidence from Italian listed firms

  • Stefano Bresciani
  • Manlio Del Giudice
  • Armando Papa
Keywords: corporate governance; state ownership; italian public utilities; conflicting pressure; social mandate

Abstract

Purpose of the paper: The present research investigates the governance of Italian public utilities whose top management is engaged in balancing the conflicting pressures of the business model and the social functions. In this regard, public control appears to influence only the form of ownership structure. Conversely, the nature of the public management mechanisms does appear to substantially affect the management side of these organisations.

Methodology: The research performed an empirical quantitative evaluation of the 13 public utilities listed on the Italian Stock Exchange. In line with mainstream literature methodology, the ownership and governance structures are provided for each company, in the context of the governments intention to maintain its central role in the management and control of the business activities.

Findings: With reference to and in line with the best practices, as acknowledged by international literature on corporate governance, interesting predictions emerge, in relation to the degree of ownership concentration and dominance exercised by the government within the company. Corporate governance and board composition are further found to represent good proxies of the level of public management discretion in the decision-making process.

Research limitations/implications: The specificity of the researchs geographic focus (i.e. Italy) de facto implies that there are some country-specific conditions that affect the industrial behaviour and financial performance of the observed firms in a different way than they would in other countries; thus, prohibiting generalisations in the international context. Additionally, the analysis does not adequately take into account the interference effects between industries (e.g. cross-sectorial learning). Finally, the research is largely interpretative and exploratory. And while this provides a solid scientific foundation for further research it does not, itself, subject any hypothesis to statistical testing and validation.

Originality of the paper: The research sheds light on the subject of managing conflicting demands, top managements autonomy and the preservation of the significant role of the public as well, in relation to public utilities organisations. It is an original study with Italy in its focus, but with international significance, which reframes managerial debates concerning privatization and public utilities functioning.

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Published
2017-04-30