Abstract
The article concentrates on the main challenge tackled by the state-owned enterprises (SOEs) reform initiated by the 15th government of the Republic of Lithuania – an attempt to improve the corporate governance practices and management efficiency of Lithuanian SOEs. According to the insights offered by the new public management (NPM) paradigm, resource dependency theory (RDT) and principal-agent theory (PAT), the present research seeks to identify a quantifiable relationship between the composition of the board (which is one of the core aspects of the Lithuanian SOE reform) and return on equity (ROE) in Lithuanian SOEs (which is selected to be the key variable defining management efficiency). Based on key relationships among the selected parameters of the board (e.g., size, political independency, gender diversity, other) and SOE management efficiency identified, this paper offers practical public policy recommendations in the field of SOE management efficiency.
Highlights
In the recent years, the Government of Lithuania has been implementing various reforms targeting at inefficiencies of public sector institutions
Based on the insights coming from the new public management (NPM) paradigm, resource dependency theory (RDT) and principal-agent theory (PAT), the authors of the paper raise the main hypothesis that the improved composition of the boards in Lithuanian SOEs should have a positive influence on SOEs management efficiency (ROE)
Based on the insights coming from the new public management (NPM) paradigm, resource dependency theory (RDT) and principal-agent theory (PAT), the main hypothesis of the paper was raised stating that the full and proper implementation of corporate governance principles should have a positive influence on the SOE management (ROE) efficiency via a better quality of the boards (with the following independent variable tested during the research ((i) the size of the board, (ii) percentage of women on the board, (iv) percentage of female presence in boards, (v) board independence, (vi) CEO duality)
Summary
The Government of Lithuania has been implementing various reforms targeting at inefficiencies of public sector institutions. The majority of these reforms aim to implement best practices from other countries and such international organizations as the Organisation for Economic Co-operation and Development (OECD). There have been many significant improvements, there are many areas which still need further attention This can be clearly seen from the financial situation of Lithuanian SOEs (return on equity was only 2% for the whole sector in the year 2012). Return on equity is widely used as a measure of a firm’s management efficiency, and there are many internal as well as external factors which influence its value.
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