The New Zealand electricity industry provides us with a unique opportunity to examine how
entities responded to major restructuring of the industry. This research studies the financial
performance of three entities, each with a different ownership structure, over a 15 year period
from 1988 to 2002. The aim is to examine the possible influence of ownership type and
corporatisation on the development and financial performance of the entities by examining the
changes that took place from the pre-corporatisation period to the post-corporatisation period and
comparing and contrasting the performance and funding of the three entities over that time. In
this way an assessment is made of the possible influence of ownership type on financial
performance. This research can be framed to some extent by agency theory aspects of positive
accounting theory. In addition legitimacy theory has been used to explain the behaviour of
managers and the process of organizations adapting to a changing environment. Both theories
acknowledge the interaction of organizations and their environment.
The comparison shows that at the end of the study period the council owned company was the
smallest, in terms of total assets, of the three companies examined (although it was similar in size
to the biggest one at the outset). The council owned company also returned most capital to its
shareholders and is the most conservatively financed one of the three with only 10% debt at the
end of 2002 compared to 28% for the trust-held company and 87% for the listed company. The
listed company ended up being the biggest and the one with the highest gearing, the highest
ROA and the highest profit margin. The study concludes that ownership structure did have an
influence on financial performance and level of debt funding
