Carlo CAMBINI (Politecnico Turin)
« Capital Structure and Regulation: Do Ownership and Regulatory Independence Matter? »
Capital Structure and Regulation: Do Ownership and Regulatory Independence Matter?
Bernardo Bortolotti (Università di Torino, FEEM), Carlo Cambini (Politecnico di Torino, IMT Lucca and FEEM), Laura Rondi (Politecnico di Torino, CERIS-CNR and FEEM) and Yossi Spiegel (Tel Aviv University, CEPR and ZEW)
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.