Type: Working Paper
Regulatory Independence, Ownership and Firm Value: The Role of Political Institutions
Working Paper, EUI RSCAS, 2011/43, Florence School of Regulation, [Communications and Media]
BORTOLOTTI, Bernardo, CAMBINI, Carlo, RONDI, Laura, Regulatory Independence, Ownership and Firm Value: The Role of Political Institutions, EUI RSCAS, 2011/43, Florence School of Regulation, [Communications and Media] - https://hdl.handle.net/1814/18237
Retrieved from Cadmus, EUI Research Repository
We study the effect of the establishment of independent regulatory agencies on the market-to-book ratios of publicly traded European regulated firms observed from 1994 to 2005. We find that independent regulation in combination with residual State ownership positively affects the market value of regulated firms while high leverage increases the market value of privately controlled firms. The positive relationship between firm value and the government’s stake is particularly strong and significant in countries where political institutions do not constrain the power of the executive. We conclude that where the institutional foundations of regulatory commitment are weak, the government tends to affect the regulatory process in order to benefit State-owned firms.
Cadmus permanent link: https://hdl.handle.net/1814/18237
Series/Number: EUI RSCAS; 2011/43; Florence School of Regulation; [Communications and Media]