Capital Structure and Regulation: Do Ownership and Regulatory Independence Matter?

Bernardo Bortolotti, Carlo Cambini, Laura Rondi and Yossi Spiegel

Journal of Economics & Management Strategy, 2011, vol. 20, issue 2, 517-564

Abstract: We study the effect of ownership structure and regulatory independence on the interaction between capital structure and regulated prices using a comprehensive panel data of publicly traded European utilities. We find that firms in our sample tend to have a higher leverage if they are privately controlled and regulated by an independent regulatory agency. Moreover, the leverage of these firms has a positive and significant effect on their regulated prices, but not vice versa. Our results are consistent with the theory that privately controlled regulated firms use leverage strategically to obtain better regulatory outcomes.

Date: 2011
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https://doi.org/10.1111/j.1530-9134.2011.00296.x

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Working Paper: Capital Structure and Regulation: Do Ownership and Regulatory Independence Matter? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:20:y:2011:i:2:p:517-564

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