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Conflict of interests and governance mechanisms in Italian local public utilities

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  • Andrea Calabrò
  • Mariateresa Torchia

Abstract

Stemming from agency theory, the paper examines governance mechanisms in Local Public Utilities (LPUs) in order to identify different and co-existing situations of conflict of interest t that may arise among the different actors (citizens, Local Governments, private shareholders, service providers) involved in the governance of LPUs. The paper summarizes the main results of the multiple case study analysis on 10 Italian listed LPUs identifying multiple principals and agents. Although governance mechanisms (e.g., the board of directors) have different roles and functions and may prevent and mitigate such conflicts, our findings suggest that there are several problematic issues. First, the effects of ownership structure on board composition and functioning. Second, higher numbers of independent directors do not mean "actual" board independence. Third, the Service Charter as a tool for promoting transparency, accountability and public participation is not yet well implemented. The paper contributes to the debate on LPUs suggesting possible developments of agency theory by including forms of citizens' participation and engagement (co-production).

Suggested Citation

  • Andrea Calabrò & Mariateresa Torchia, 2011. "Conflict of interests and governance mechanisms in Italian local public utilities," Banca Impresa Società, Società editrice il Mulino, issue 1, pages 105-136.
    • Handle: RePEc:mul:jqmthn:doi:10.1435/34752:y:2011:i:1:p:105-136
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    Cited by:

    1. Eitan, Avri, 2023. "How are public utilities responding to electricity market restructuring and the energy transition? Lessons from Israel," Utilities Policy, Elsevier, vol. 82(C).

    More about this item

    Keywords

    Conflict of interest; mechanisms of governance; board of directors; local public services; L60; L25; L11; L15; M16.;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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