Investment and capital structure of partially private regulated firms
Author(s): Carlo Cambini, Yossi Spiegel
CEPR Discussion Paper Number 8508
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Programme Area(s): Financial Economics (FE), Industrial Organization (IO)
Date of Publication: 01/08/2011
Keyword(s): debt, government ownership, investment, regulation, regulatory climate, regulatory independence
JEL(s): G32, L33, L51
Abstract: We develop a model that examines the capital structure and investment decisions of regulated firms in a setting that incorporates two key institutional features of the public utilities sector in many countries: firms are partially owned by the state and regulators are not necessarily independent. Among other things, we show that firms invest more, issue more debt, and are allowed to charge higher prices when they are more privatized and when the regulator is more independent and more pro-firm.
* CEPR Research Fellows and Affiliates, Corporate Members and Subscribers can download papers without charge. Individual Papers may be purchased at www.cepr.org
Author(s): Carlo Cambini, Yossi Spiegel
CEPR Discussion Paper Number 8508
Paper Details | PDF Download* | Purchase Electronic | Purchase Printed
Programme Area(s): Financial Economics (FE), Industrial Organization (IO)
Date of Publication: 01/08/2011
Keyword(s): debt, government ownership, investment, regulation, regulatory climate, regulatory independence
JEL(s): G32, L33, L51
Abstract: We develop a model that examines the capital structure and investment decisions of regulated firms in a setting that incorporates two key institutional features of the public utilities sector in many countries: firms are partially owned by the state and regulators are not necessarily independent. Among other things, we show that firms invest more, issue more debt, and are allowed to charge higher prices when they are more privatized and when the regulator is more independent and more pro-firm.
* CEPR Research Fellows and Affiliates, Corporate Members and Subscribers can download papers without charge. Individual Papers may be purchased at www.cepr.org