Privatization, Corporate Control and Regulatory Reform: The case of Telefonica
Germà Bel () and
Finance from University Library of Munich, Germany
This study analyzes the interaction of agency problems in public policy and of agency problems inside the firm: it investigates the case of a large privatized firm subject to many policy constraints. The last steps of Telefonica's privatization were designed to promote a disperse ownership and give managers a high level of discretion in running the company. By this, the government effectively created an agency problem inside the firm. There were no powerful shareholders to constrain the managers, and the threat of a takeover was not a credible one, since the government kept a golden share. There is no overall evidence of capture of politicians and regulators by managers in the interest of shareholders, although evidence suggests the existence of collusion between politicians and managers. We interpret the political interference with the firm’s control (a well documented phenomenon both in this study and in the cross-country literature on privatization; e.g. political ends in privatization, influence in appointments, golden shares) as the most visible part of such collusion. Liberalization and multi-level regulation will likely make any type of collusion or capture more difficult in the future.
Keywords: Governance; Privatization; Regulation; Deregulation; Capture (search for similar items in EconPapers)
JEL-codes: G32 G34 G38 L22 L43 L51 L94 P16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his and nep-reg
Note: Type of Document - pdf; pages: 24
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Journal Article: Privatization, corporate control and regulatory reform: the case of Telefonica (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpfi:0409053
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