Ownership and Firm Performance: Empirical Evidence from the European Telecommunications Industry (2006-14)

The present chapter provides an overview of the major State-invested enterprises (SIEs) operating in the European Telecommunications industry, describes their features and empirically investigates the potential differences in performance from private enterprises. Balance sheet and ownership data are extracted from the Orbis Database and cover the time-span 2006-2014. 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.