Exploring the Link between Corporate Governance and Efficiency of Italian Water Utilities

Abstract

The present paper analyzes the linkage between the corporate governance of Italian water utilities (ownership, board size and board composition) and their efficiency measured through data envelopment analysis (DEA). Using a general panel data regression model, we found that board size negatively affects the efficiency of water utilities. Moreover, the presence of directors with political affiliations or who are/were members of local or national government negatively affects efficiency, and the presence of directors with a degree on the board has a slight negative effect on productivity. Conversely, other variables (ownership, gender diversity and average age of board members) were found not to affect the efficiency of Italian water utilities. The existence of economies of scale was also confirmed.