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Board composition and performance of state-owned enterprises: quasi-experimental evidence

Author

Listed:
  • Audinga Baltrunaite
  • Mario Cannella
  • Sauro Mocetti
  • Giacomo Roma

Abstract

We analyze the impact of board composition on the performance of companies controlled by public entities in Italy, using a reform-induced change. The law’s provisions, aimed at increasing female representation and at reducing the revolving-door phenomenon, were binding for state-owned enterprises (SOEs), but not for companies with a minority share of public ownership, allowing to adopt a difference-in-differences estimation. Results show that female presence on the boards of directors of SOEs increased, while that of former politicians decreased. New directors replaced older and less talented men, thereby rejuvenating the boards and improving their quality. To assess the effects on firm performance, we analyze companies’ balance sheets and survey information on citizens’ satisfaction with the provision of local public services and on objective measures of their quality. While firm productivity remains unaffected, we find that profitability increases and leverage decreases, thereby lowering corporate credit risk, and that SOEs’ output quality improves (JEL G34, L32, H42).

Suggested Citation

  • Audinga Baltrunaite & Mario Cannella & Sauro Mocetti & Giacomo Roma, 2025. "Board composition and performance of state-owned enterprises: quasi-experimental evidence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 41(1), pages 239-263.
    • Handle: RePEc:oup:jleorg:v:41:y:2025:i:1:p:239-263.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewad014
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    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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