Central v. local ownership of firms
Creators: name: Taorchini, Anna
Publisher: name: IMT Alti Studi Lucca
Year: 2008
Subjects: HB Economic Theory

description: This work analyses the presence of public shareholding in limited companies in European countries. Firms owned by public bodies (State or local authorities) can be found in many economic sectors. This type of governance stretches its influence beyond its traditional domains, including business areas in which competition is a common feature. In recent years these companies have changed in some cases their usual governance, including private shareholders alongside public entities: companies whose ownership is shared among public and private entities are often called mixed enterprises. The analysis not only focuses on public central ownership; it also presents and analyses the evidence of a strong local public shareholding in European enterprises. A very demanding and time consuming part of the work has been building a unique database, which has then been studied in its different facets. This database includes more than 5,600 EU companies with public shareholders; more than 40% of them are participated by local authorities. The data analyzed were collected from the official accounts of the same companies. The main results of the analysis can be summarized as follows. First, the descriptive statistics have shown that public ownership, both at central and local level, is widespread in Europe. Such ownership has however different degrees of importance across industries. Second, the analysis of the companies' financial figures has pointed out some clear differences between Western European Countries and Eastern European Countries. Despite undeniable progress, in many sectors Eastern European Countries firms still suffer from their starting point, inadequacy of the infrastructure and different degree of technological development. In the same way, we document and test the disparities between different sectors within the same Country and between the same sectors across Countries. For example, at European level the sector with the highest profitability appears to be finance (followed by communications), while the countries with the highest profitability appear to be Luxembourg followed by Estonia and Slovakia. A further analysis has compared the value added produced by companies where a public shareholder is present and the total values added of European regions. This has confirmed the remarkable relevance of the companies with public shareholdings on the economy of the countries considered, which amounts to an average value of 4.7% of the value added, which in some regions reaches 15%. This result remains true at the local level: enterprises with local public shareholders have a leading role in the GDP at the regional level. The Italian case, sometimes indicate as one where the public presence is pathologically high, does not stick out as something too different from what we observe in countries such as France, Germany or the Netherlands. Significant differences were found on the tests on averages and medians. through classifying the companies in the sample by shareholder type, by sector, by geographical area and by governmental from in the local area of reference. Finally, some regression tests were made to show that performance indicators were correlated with some enterprise characteristics - size, activity sector, shareholder type (central or local), and share percentage (total public v. partial public). For the latter we tested whether the institutional structure of the countries to which enterprises belong (federal Countries v. non-federal Countries) and public shareholder type could influence the performance of government-owned enterprises.