The Government as Shareholder: The Effects of Public Ownership on Corporate Governance, Sustainability and Service Quality

How does public ownership affect corporate performance? Due to the significant heterogeneity that exists within ownership models, the answer to this question may vary depending on different performance dimensions and factors that affect the incentives of public and private actors. In three empirical chapters, this thesis examines the impact of various manifestations of public ownership on corporate governance, environmental sustainability and public service quality. The first chapter examines whether different state-owned enterprises (SOEs) legal structures can moderate the levels of political interference, measured as the CEO turnover sensitivity to political change. I find that, while CEOs are more likely to be replaced following a change in government, the turnover-political change sensitivity is weaker when the boards of directors’ independence increases and when SOEs are controlled by a single shareholding entity. The second chapter examines the differences in environmental performance between publicly and privately owned multinational firms by comparing their CO2 emissions in domestic and foreign operations. I find that state ownership is positively associated with domestic environmental performance, at least in high-income countries. However, this association disappears in their foreign operations, where there are no significant differences between public and private firms. The third chapter examines whether service quality varies among water utilities operating under two different privatization models: concessions (private management-public ownership) and asset selling (private management-private ownership). I find that: 1) user-related quality aspects are worse when private management is accompanied by private ownership; 2) asset selling and concessions do not have relevant differences in the case of contractable and asset-related quality dimensions; and 3) asset selling is not associated with better performance for uncontracted asset-related quality dimensions. By integrating insights from the literature on corporate governance, political economy and public administration, this thesis provides a nuanced analysis of the merits and demerits of public and private ownership.