STRATEGIC OBJECTIVES FOR STATE-OWNED ENTERPRISES AS A MEANS TO MITIGATE POLITICAL INTERFERENCE: AN EMPIRICAL ANALYSIS OF TWO SWISS STATE-OWNED ENTERPRISES

Fabian Liechti, Matthias Finger

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)

Abstract

When governments act as owners of state-owned enterprises (SOEs), they are both principal and agent at the same time. The literature on steering SOEs has mainly focused on the government as the principal that must control SOEs. However, the government is also an agent, vis-à-vis the parliament, because democratic constitutions stipulate some form of parliamentary oversight of the government. This oversight includes checks on how the government steers SOEs. However, this oversight function gives the parliament the power and opportunity to interfere into steering SOEs, which may lead to parliamentary interventions that are not coherent with governmental steering. We draw on principal–agent literature and public-accountability literature to show that arbitrary and hands-on parliamentary interference pose problems for steering SOEs. We analyze whether strategic objectives for SOEs, as recommended by public corporate governance guidelines, are appropriate to minimize parliamentary interference. We hypothesize that the Swiss government avoids or mitigates parliamentary interference by mid-term strategic objectives for SOEs, which counteract short-term parliamentary requests. We find that the Swiss government uses mid-term strategic objectives, particularly financial ones, to reject parliamentary demands for more intervention into SOE activities.

Original languageEnglish
Pages (from-to)513-534
Number of pages22
JournalAnnals of Public and Cooperative Economics
Volume90
Issue number3
DOIs
Publication statusPublished - 1 Sept 2019
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2018 The Authors Annals of Public and Cooperative Economics © 2018 CIRIEC

Keywords

  • accountability and delegation
  • L32
  • L33
  • L51
  • public enterprises
  • State-owned enterprises

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