State-owned enterprises’ corporate governance: Evidence from a Portuguese company

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Abstract

This paper analyses state-owned enterprises’ (SOEs) corporate governance, addressing whether there are differences between these and private enterprises that make it necessary to formulate a specific corporate governance theory for the former. This will be achieved through a case study based on Carris company, mitigating the lack of empirical knowledge in this field and taking a step forward by clearly proving what it is suggested by the literature: SOEs’ governance particularities actually influence their day-to-day business and financial viability. That helps to highlight the urgency to apply adequate corporate governance techniques to SOEs, more aligned with their characteristics. SOEs have a different legal status, more volatile operating goals, soft budget constraints, lack of public service contracts (and consequent mismatch of the corresponding compensatory allowances due for the public service provided), and different criteria for professional appointment and selection. More importantly, they suffer from multiple principals’ phenomenon: multiple principals, multiple problems. It is, therefore, recommended some changes regarding their corporate governance, such as the incorporation of the comply-or-explain principle; introduction of a code of best practices in the public managers’ appointment process; and contractual arrangements regarding the public service provided, with the multiannual allocation of the corresponding compensatory allowances.

Keywords: Corporate Governance, State-Owned Enterprises, Multiple Principals, Compensatory Allowances, Public Managers Recruiting Process, Carris Company

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

Acknowledgments: I want to thank Prof. Paulo Trigo Pereira and Prof. Pedro Verga Matos (ISEG, University of Lisbon) for all the comments and suggestions that allowed me to greatly improve the quality of this paper. Also, a thank you note to all participants of the International Online Conference (May 7-9, 2020) “Corporate Governance: Examining key challenges and perspectives” that have made useful constructive comments to the present paper.

JEL Classification: G34, L32, L33

Received: 20.06.2020
Accepted: 28.09.2020
Published online: 01.10.2020

How to cite this paper: Vicente, J. A. (2020). State-owned enterprises’ corporate governance: Evidence from a Portuguese company. Corporate Ownership & Control, 18(1), 127-137. https://doi.org/10.22495/cocv18i1art10