A Political Economy of Privatization Contracts : The Case of Water and Sanitation in Ghana and Argentina

This document is the Accepted Manuscript version of the following article: Hulya Dagdeviren, Simon A. Robertson, 'A Political Economy of Privatization Contracts: The Case of Water and Sanitation in Ghana and Argentina', Competition & Change, Vol. 18 (2): 150-163, April 2014. The final, published version is available online at DOI: https://doi.org/10.1179/1024529414Z.00000000053. Published by SAGE.In general, the process and outcomes of privatization have been studied from the point of view of efficiency. In this article, we consider issues in the course of contract design, implementation, management and enforcement in privatized public services and utilities. The study is based on two case studies, involving several water concessions in Argentina and a management contract in the urban water sector in Ghana. Three key arguments are presented on the basis of these case studies. The first is that an individualistic analytical framework is often utilized by the mainstream economic perspectives, but these are inadequate for a comparative assessment of private versus public provision in public services where there are distinct collective or group interests and hence a wider socio-economic context and representation of different interests becomes highly important. Instead, the article proposes a political economy perspective, which pays due attention to distributional issues, group interests, ideology of states and power relations for the assessment of privatization contracts. Second, the administrative capacity of states and their resources play a key role for the outcomes of privatization. Finally, while some contractual issues could be resolved through resourcing and experience over time, others are inherent to the contractual relations with little prospect of remedy.Peer reviewe

Sponsor ownership in Asian REITs

This study examines the relationship between sponsor ownership and firm performance proxied by firm value, operating cash flow, and dividend policy with Asian real estate investment trusts (REITs) in Japan, Hong Kong, Malaysia, and Singapore for the period from 2002 to 2012, focusing on both the incentive alignment effect and the entrenchment effect. Our study sheds new light on effective corporate governance for Asian REITs that are prone to agency problems. Such agency problems arise from the inequitable distribution of power to sponsors that results from the external management structure. The findings suggest that larger sponsor ownership aligns the interests of sponsors and minority shareholders and enhances the performance of Asian REITs, while such an effect diminishes as sponsors become more entrenched. We find that the incentive alignment effect and entrenchment effect are primarily driven by developer-sponsored REITs. Also evident is that the presence of institutional investors mitigates agency problems and increases firm performance

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This paper reviews the scope for economic modelling in international business studies. It argues for multi-level theory based on classic internalisation theory. It present a systems approach that encompasses both firm-level and industry-level analysis

An examination of the relationship of governance structure and performance: Evidence from banking companies in Bangladesh

Corporate governance has become increasingly important in developed and developing countries just after a series of corporate scandals and failures in a number of countries. Corporate governance structure is often viewed as a means of corporate success despite prior studies reveal mixed, somewhere conflicting and ambiguous, and somewhere no relationship between governance structure and performance. This study empirically investigates the relationship between corporate governance mechanisms and financial performance of listed banking companies in Bangladesh by using two multiple regression models. The study reveals that a good number of companies do not comply with the regulatory requirements indicating remarkable shortfall in corporate governance practice. The companies are run by the professional managers having no duality and no ownership interest for which they are compensated by high remuneration to curb agency conflict. Apart from some inconsistent relationship between some corporate variables, the corporate governance mechanisms do not appear to have significant relationship with financial performances. The findings reveal an insignificant negative impact or somewhere no impact of independent directors and non-independent non-executive directors on the level of performance that strongly support the concept that the managers are essentially worthy of trust and earn returns for the owners as claimed by stewardship theory. The study provides support for the view that while much emphasis on corporate governance mechanisms is necessary to safeguard the interest of stakeholders; corporate governance on its own, as a set of codes or standards for corporate conformance, cannot make a company successful. Companies need to balance corporate governance mechanisms with performance by adopting strategic decision and risk management with the efficient utilization of the organization’s resources

Ownership, Activism and Engagement: Institutional Investors as Active Owners

Research Question We research two questions: First, why do some institutional investors operate at a distance from organizations seemingly acting only to “exit” and “trade” shares while others actively engage through various means of “voice”? Second, what processes and behaviour are associated with active ownership? Research Findings/Insights We develop the concept of active ownership by drawing on contrasting theories and images of ownership, identifying antecedents of active ownership and distinguishing between alternative processes of active ownership. Theoretical/Academic Implications Alternative pathways to active ownership contrast the distant, sometimes adversarial nature of shareholder activism with an engaged, collaborative relationship between investors and corporations. Few studies examine active ownership as a process of engagement and mutual exchange between parties taking a generally longer-term perspective towards investment in the firm and its affairs. After modelling active ownership, we develop a research agenda of substantive issues ranging from market and institutional conditions, through investment organization and practice, to board and investor relations. Practitioner/Policy Implications Opening up the multidimensionality of engagement and relations between investors and corporations is crucial to promoting good corporate governance. Policymakers and practitioners require such knowledge when anticipating and developing adjustments to institutions of corporate governance. This article is protected by copyright. All rights reserved

Regulation and the Evolution of Corporate Boards: Monitoring, Advising or Window Dressing?

An earlier version of this paper was entitled “Deregulation and Board Composition: Evidence on the Value of the Revolving Door.”It is generally agreed that boards are endogenously determined institutions that serve both oversight and advisory roles in a firm. While the oversight role of boards has been extensively studied, relatively few studies have examined the advisory role of corporate boards. We examine the participation of political directors on the boards of natural gas companies between 1930 and 1998. We focus on the expansion of federal regulation of the natural gas industry in 1938 and 1954 and subsequent partial deregulation in 1986. Using data sets covering the periods from 1930 to 1990 and 1978 to 1998, we test whether regulation and deregulation altered the composition of companies' boards as the firms' environment changed. In particular, did regulation cause an increase and deregulation a decrease in the number of political directors on corporate boards? We find evidence that the number of political directors increases as firms shift from market to political competition. Specifically, the regulation of natural gas is associated with an increase in the number of political directors and deregulation is associated with a decrease in the number of political directors on boards

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Industrial economists surmise a relation between the size distribution of firms and performance. Usually, attention is focused on the high end of the size distribution. The widely used 4-firm seller concentration, C4, ignores what happens at the low end of the size distribution. An investigation is presented of the extent to which the level and the growth of small business presence influence price-cost margins in Dutch manufacturing. A large data set of 66 industries for a 13-year period is used. This allows the investigation of both small business influences within a framework in which that of many other market structure variables is also studied. Evidence is shown that price-cost margins are influenced by large firm dominance, growth in small business presence, capital intensity, business cycle, international trade, and buyer concentration

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Research linking credible commitments to the rule of law in terms of property rights and contract enforcement is a hallmark of recent efforts to explain economic growth and development. However, many postcommunist states have had difficulty making such commitments and spurring growth. Many argue political polarization prevents states from reforming laws and protecting property rights in some countries whereas single-party governance renders state promises incredible in others. I analyze pooled cross-sectional time-series data for twenty-four postcommunist countries and provide evidence effective constraints among elected officials act as democratic commitment mechanisms rendering government policies credible

Bottleneck co-ownership as a regulatory alternative

This paper proposes a regulatory mechanism for vertically related industries in which the upstream “bottleneck” segment faces significant returns to scale while other (downstream) segments may be more competitive. In the proposed mechanism, the ownership of the upstream firm is allocated to downstream firms in proportion to their shares of input purchases. This mechanism, while preserving downstream competition, partially internalizes the benefits of exploiting economies of scale resulting from an increase in downstream output. We show that this mechanism is more efficient than a disintegrated market structure in which the upstream natural monopoly bottleneck sets a price equal to average cost

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The study examines the impact of liquidity risk on freight derivatives returns. The Amihud liquidity ratio and bid–ask spreads are utilized to assess the existence of liquidity risk in the freight derivatives market. Other macroeconomic variables are used to control for market risk. Results indicate that liquidity risk is priced and both liquidity measures have a significant role in determining freight derivatives returns. Consistent with expectations, both liquidity measures are found to have positive and significant effects on the returns of freight derivatives. The results have important implications for modeling freight derivatives, and consequently, for trading and risk management purposes