Conflicts of Interest and Governance Mechanisms in Italian Local Public Utilities

Abstract

Stemming from different theoretical perspectives the article examines the conflicts of interest arising among the actors (citizens, local governments, private shareholders, service providers) that at various levels are involved in local public utilities governance systems. The main results of a multiple case study analysis on 10 Italian listed local public utilities are summarized. Different and coexisting situations of conflicts of interest among multiple principals and agents are identified. In this context, governance mechanisms (e.g., the board of directors) have different roles and functions and may prevent and mitigate such conflicts. However, our findings suggest that the ownership structure influences board composition and functioning and that higher numbers of independent directors do not necessarily mean “actual” board independence. The article contributes to the debate on conflicts of interest and governance mechanisms in local public utilities.