Reluctant Regulation

41 Pages Posted: 27 Apr 2012

See all articles by Bernardo Bortolotti

Bernardo Bortolotti

Bocconi University; University of Turin

Carlo Cambini

Politecnico di Torino & EUI - Florence School of Regulation; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Laura Rondi

Politecnico di Torino

Date Written: April 23, 2012

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.

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

JEL Classification: K23, L33, L51, L90, G32

Suggested Citation

Bortolotti, Bernardo and Cambini, Carlo and Rondi, Laura, Reluctant Regulation (April 23, 2012). Paolo Baffi Centre Research Paper No. 2012-113, Available at SSRN: https://ssrn.com/abstract=2046912 or http://dx.doi.org/10.2139/ssrn.2046912

Bernardo Bortolotti (Contact Author)

Bocconi University ( email )

Via Sarfatti 25
Milan, MI 20136
Italy

University of Turin

Via Po 53
Torino, Turin - Piedmont 10100
Italy

Carlo Cambini

Politecnico di Torino & EUI - Florence School of Regulation ( email )

Corso Duca degli Abruzzi, 24
Torino, Torino 10129
Italy
+390115647292 (Phone)
+390115647299 (Fax)

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Laura Rondi

Politecnico di Torino ( email )

Department of Management
Corso Duca degli Abruzzi, 24
Torino, 10129
Italy
+39 011 0907232 (Phone)

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