The Reform of Network Industries
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The Reform of Network Industries

Evaluating Privatisation, Regulation and Liberalisation in the EU

Edited by Massimo Florio

Network industries such as electricity, gas, rail, local public transport, telecommunications and postal services are recognised by the EU as crucial for fostering European social and territorial cohesion. Providing an overview of key policy reforms in these industries and an empirical evaluation, this thought-provoking book offers a critical perspective on the functioning of the networks that provide vital services to EU citizens.
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Chapter 5: Ownership and firm performance: empirical evidence from the European telecommunications industry (2006–14)

Paolo Castelnovo


This chapter provides an overview of the major State-invested enterprises (SIEs) operating in the European telecommunications industry; it describes their features and empirically investigates the potential differences in performance compared to private enterprises. Balance sheet and ownership data from 2006–14 are extracted from the Orbis Database. Descriptive statistics reveal that modern SIEs are not significantly different in size from private companies but have achieved a significantly higher profitability. This finding is confirmed by an econometric analysis accounting for firm- and country-level characteristics, regulatory constraints in the telecommunication industry and time fixed-effects. Regression results show that, even when controlling for the full set of covariates, SIEs display higher margins than their private counterparts. Additional relevant determinants of firms’ profitability are the probability of being listed on the stock exchange and market regulation, described by the ETCR aggregate indicator for the telecom sector.

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