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Corporatization and Firm Performance: Evidence from Publicly-Provided Local Utilities

Cambini, Carlo ; Filippini, Massimo ; Piacenza, Massimiliano ; Vannoni, Davide

In: Review of Law & Economics, 2011, vol. 7, no. 1, p. 191-213

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    Title
    • Corporatization and Firm Performance: Evidence from Publicly-Provided Local Utilities
    Author
    • Cambini, Carlo. Politecnico di Torino and HERMES-Italy
    • Filippini, Massimo. University of Lugano and ETH Zurich-Switzerland
    • Piacenza, Massimiliano. University of Torino, Ceris-CNR and HERMES-Italy
    • Vannoni, Davide. University of Torino and Collegio Carlo Alberto
    Document Type
    • Postprint
    OAI-PMH Identifier
    • oai:doc.rero.ch:304173
    Summary
    This study investigates the effects of the corporatization process - i.e., the transformation of a municipal firm into a limited liability company - on the production costs of local public services whose ownership is maintained by the local government. Theoretical analysis predicts that, even without privatization, corporatization is a potentially effective way to improve efficiency (Shleifer and Vishny, 1994; Stiglitz, 2000). We explore this issue by using information on a typical local utility, such as the bus service provided by public transit systems in Italy, which experienced a reform of the governance towards the corporatization structure during the '90s. The results on a sample of 33 local bus companies over the period 1993-2002 show that, even if public ownership persists, the transformation of a municipal enterprise into an autonomous company - corresponding to the first stage of the corporatization of local utilities in Italy - or into a limited liability company exerts a reducing impact on production costs