Investment and capital structure of partially private regulated firms

Yossi Spiegel and Carlo Cambini

No 8508, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Regulatory climate; Regulatory independence; Government ownership; investment; Debt; Regulation (search for similar items in EconPapers)
JEL-codes: G32 L33 L51 (search for similar items in EconPapers)
Date: 2011-08
New Economics Papers: this item is included in nep-cfn and nep-reg
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Citations: View citations in EconPapers (4)

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