Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/74041
Authors: 
Cambini, Carlo
Bortolotti, Bernardo
Rondi, Laura
Spiegel, Yossi
Year of Publication: 
2007
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 94.2007
Abstract: 
We construct a comprehensive panel data of 96 publicly traded European utilities over the period 1994-2005 in order to study the relationship between the capital structure of regulated firms, regulated prices, and investments, and examine if and how this interaction is affected by ownership structure. We show that firms in our sample increase their leverage after becoming regulated by an independent regulatory agency, but only if they are privately controlled. Moreover, we find that the leverage of these firms has a positive and significant effect on regulated prices, but not vice versa, and it also has a positive and significant effect on their investment levels. Our results are consistent with the theory that privately-controlled firms use leverage strategically to shield themselves against regulatory opportunism.
Subjects: 
Regulated Utilities
Regulatory Agencies
Capital Structure
Leverage
Investment
Private and State Ownership
JEL: 
L51
G31
G32
L33
Document Type: 
Working Paper

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