Verfügbarkeit und Qualität der Beteiligungsberichterstattung der öffentlichen Hand im 17-Länder-Vergleich

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1 Verfügbarkeit und Qualität der Beteiligungsberichterstattung der öffentlichen Hand im 17-Länder-Vergleich (Ulf Papenfuβ, Lars Steinhauer, Benjamin Friedländer) Jean Monnet Network Service of General Interest in the EU Governance öffentlicher Unternehmen im europäischen Mehrebenensystem Universität Leipzig Jun.-Prof. Dr. Ulf Papenfuß, M.Sc. Lars Steinhauer, M.Sc. Benjamin Friedländer University Leipzig

2 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 2 Outline 1. Motivation 2. Theoretical Conceptualisation 3. Quality Model Development 4. Empirical Study 5. Conclusion and Outlook

3 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 3 1. Motivation Debates on debt crisis, sustainability, austerity management, and citizen participation: relevance of State-/Municipal-Owned Enterprises (SOEs) (Whincop 2005; Del Bo/Florio 2012; Van Thiel/Verhoest/Bouckaert/Laegreid 2012; Papenfuß 2014; Bruton/Peng/Ahlstrom/Stan/Xu 2015) Worldwide: SOEs represent approx.10% of global GDP, and joint sales of $3.6 trillion in 2011 (Kowalski et al. 2013; Economist 2010, 2012) In Germany: SOEs/Spin-off organisational forms represent 50% of public sector employees, and 54% of investments. SOE debts often exceed debts of core administration (Bertelsmann Foundation 2013, 2008) Great relevance of SOEs in all countries for Public Sector Management in a globalized world (OECD 2011; OECD 2005; Florio/Fecher 2011; Grossi/Marcou/Reichard 2010; Whincop 2005; Grossi/Reichard 2008; Millward 2011)

4 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 4 Importance of Aggregate Holdings Reports Overview of the SOE portfolio and information on individual SOEs. (OECD 2005) OECD Guidelines: The co-ordinating or ownership entities should develop consistent and aggregate reporting on state-owned enterprises and publish annually an aggregate report on SOEs (OECD 2005, sec. V) Accountability of SOEs for different actors regarding: use of public funds, public service provision performance, financial performance, governance information (Verhoest/Verschuere/Peters/Bouckaert 2004; Van Thiel/Verhoest/Bouckaert/Laegreid 2012; OECD 2005; OECD 2005; Hodges/Wright/Keasy 1996) Citizens: accountability and citizen participation Politicians: necessary overview on policy instruments, use of public funds and task reflections, etc. Administration: necessary overview and decision preparation basis, etc. Etc.: Consolidated financial statements and Whole of Government Reporting cannot replace or compensate Aggregate Holdings Reports because of different targets and contents coherent and supplementary information system

5 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 5 Aim of the Study and Contributions Assessment of the diffusion and quality of aggregate holdings reporting in a broad international comparison: 1. Conceptual contribution: Quality Model 2. Empirical insights on the diffusion and quality with determinants and drivers 3. Test of the implementation of OECD recommendations (OECD 2005, sec.v)

6 2. Theoretical Conceptualization Derivation of Model Criteria: Concept Accountability (e.g. Bovens 2007; Skelcher 1998; Bernier 2014) Agency Theory (e.g. Lane 2005; Greiling/Spraul 2010; Whincop 2005; Bernier 2015; Florio/Fecher 2011) Stewardship Theory (e.g. Daily/Dalton/Canella 2003; Davis/Schoorman/Donaldson 1997; Hill/Jones 1992; Donaldson/Preston 1995) Stakeholder Theory (e.g. Donaldson/Preston 1995; Heath/Norman 2004; Arens/Brouthers 2001) Property Rights Theory (e.g. Demsetz 1967; Picot 1981) Organizational Learning Theory (e.g. Greiling/Halachmi2013; Fiol/Lyles 1985) Derivation of Diffusion Requirements: Institutional Diffusion Theory (Aguilera/Cuervo-Cazurra 2004; Strang/Soule 1998; Strang/Macy 2001; Tolbert/Zucker 1983) Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 6

7 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 7 Theoretical Conceptualization Aggregate Holdings Reports crucial instrument Source: own work based on Papenfuß (2013)

8 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 8 3. Quality Model Development Model developed from: Outlined theoretical requirements Hard-law and soft-law regulations Various recommendations for information to be disclosed (e.g. OECD 2005; European Parliament 2014; World Bank 2006; Parker/Gould 1999; Bovens 2007; Wong 2004; Khumalo/Ngwenya 2012) No information overload: Each criterion discussed and appraised with practitioners Model fulfilment requires approx. 3-4 pages of tables and written text per SOE Model contains 175 criteria in 13 categories Knowledge Creep : Model implementation important and useful regardless of actual current information demand (Weiss 1980; Beesly 2004; Gamble/Blackwell 2001)

9 Quality Model Dimension Aggregate Information About the Investment Portfolio Information on Individual SOEs Category Max. Points General Information 5 Organisation Chart and Summary Table 14 Overview of Financial Ratios 18 Overview of the SOE Personnel / Staff 24 SOE in general 5 Corporate Goals 6 Financial Relationships Between City and SOE 6 Financial Ratios 43 Public Service Provision Ratios 3 Management Board 6 Supervisory Body 8 Personnel / Staff 28 Audit Quality Model for Aggregate Holdings Reports. Source: own research Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 9

10 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries Empirical Study: Hypotheses H1: Different administrative culture backgrounds influence the diffusion and quality of aggregate holdings reporting H2: Population size influences the diffusion and quality of aggregate holdings reporting H3: The economic situation of a country (GDP per capita) influences the diffusion and quality of aggregate holdings reporting H4: National debt (per capita) of a country influences the diffusion and quality of aggregate holdings reporting H5: Existing hard law regulations on reporting on SOEs influence the diffusion and quality of aggregate holdings reporting

11 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 11 Methodology: Empirical Design Comparative Design for 17 countries*: National Level Analysis: Aggregate Holdings Reports on national SOEs Public authority and National Statistical Office homepage analysis Complementary contacting per or phone inquiring the documents Local Level Analysis: Aggregate Holdings Reports on local SOEs: 10 most populous cities Public authority homepage analysis Complementary contacting via or phone inquiring the documents Quality assessment (= availability of information) of the available reports using the 175 criteria model *Sample: Australia, Austria, Belgium, Germany, Greece, Estonia, France, Israel, Lithuania, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, and United States of America.

12 Empirical Results: National Level The national reports of Estonia, Sweden, and Lithuania lead the sample Substantial lack of information (quality model fulfilment for each report below 50%) Quality spread among the sample The derived recommendations and requirements are frequently not realized in practice National Report Overall Points Fulfilment in %* Estonia 84 48,0 Sweden 58 33,1 Lithuania 57 32,6 Austria 45 25,7 Germany 39 22,3 Netherlands 31 17,7 Norway 31 17,7 Israel 23 13,1 Portugal 19 10,9 Switzerland 19 10,9 United Kingdom 17 9,7 France 10 5,7 Mean 36,1 20, * Max. 175 points possible No Aggregate Holdings Reports could be identified for Australia, Belgium, Greece, Spain, and the United Stated of America Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries Results of National Level. Source: own research 12

13 Empirical Results: National Level Despite relatively poor overall results, individual examples for single categories that are worth following could be identified For individual categories, some of the reports met the requirements closely: Dimension Aggregate Information about the Investment Portfolio Information on Individual SOEs Overall Points Category Max. Points Rank Estonia Sweden Lithuania Austria Germany possible General Information Organisation Chart and Summary Table Overview of Financial Ratios Overview of the SOE Personnel / Staff SOE in general Corporate Goals Financial Relationships btw. Publ. Adm. and SOE Financial Ratios Public Service Provision Ratios Management Board Supervisory Body Personnel / Staff Audit The 5 leading Aggregate Holdings Reports; National Results. Source: own research Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 13

14 Empirical Results: Local Level Local level: only 77 results for Germany and 1 for Austria (Innsbruck: 26 points) available Structural deficits, but individual positive examples Leading German Cities: Darmstadt (112), Berlin (79), Hannover (79) German local reports on average performed better than the national sample Max. reached shows: Criteria fulfilment is possible Dimension Aggregate Information about the Investment Portfolio Information on Individual SOEs Overall Points Category Max. Points Possible Mean Mean in % Variation Coefficient Max. Reached General Information 5 1,7 34, Organisation Chart and Summary Table 14 7,4 52,9 38,2 13 Overview of Financial Ratios 18 3,1 17,2 126,4 13 Overview of the SOE Personnel / Staff 24 1,4 5,8 211,2 15 SOE in general 5 2,1 42,0 53,3 4 Corporate Goals 6 2,4 40, Financial Relationships btw. Publ. Adm. and SOE 6 1,9 31, Financial Ratios 43 14,6 34,0 49,6 27 Public Service Provision Ratios 3 0,4 13,3 215,1 3 Management Board 6 1,2 20, Supervisory Body 8 2,9 36,3 61,1 6 Personnel / Staff 28 2,9 10,4 84,8 12 Audit 9 0,5 5,6 160, ,4 24,2 35,7 114 Results of German local analysis (n=77). Source: own research Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 14

15 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 15 Discussion of the Hypotheses: Pattern Tendencies X X H1: Different administrative culture backgrounds influence the diffusion and quality of aggregate holdings reporting H2: Population size influences the diffusion and quality of aggregate holdings reporting H3: The economic situation of a country (GDP per capita) influences the diffusion and quality of aggregate holdings reporting H4: National debt (per capita) of a country influences the diffusion and quality of aggregate holdings reporting H5: Existing hard law regulations on reporting on SOEs influence the diffusion and quality of aggregate holdings reporting

16 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries Conclusion and Outlook Quality Model: conceptual contribution for researchers and practitioners Theoretical and practical requirements frequently not met (e.g. OECD recommendations) Strong quality differences with relevance for the international agenda Strongest influencing factors: administrative culture, hard-law regulations Public Policy Lessons Ensure implementation and sanctions Directives (European level) and laws (national level) Conduct or commission research (see below) Research Perspectives Broaden sample and conduct longitudinal studies Analyse drivers for good quality and diffusion Explore the use of the reports Assess the effects of the reports

17 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 17 Thank you very much! Jun.-Prof. Dr. Ulf Papenfuß, M.Sc. Lars Steinhauer, M.Sc. Benjamin Friedländer University Leipzig

18 Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 18 Empirical Results: National Level Dimension Aggregate Information about the Investment Portfolio Information on Individual SOEs Overall Points EE SE LT AT DE NL NO IL PT CH UK* FR** Mean (n=12) Mean in % (n=12) Variation Coefficient (n=12) General Information ,0 40,0 70,7 Organisation Chart and Summary Table ,3 31,0 79,0 Overview of Financial Ratios ,2 39,8 78,1 Overview of the SOE Personnel / Staff ,7 11,1 150,3 SOE in general ,2 23,3 84,5 Corporate Goals ,8 30,6 101,6 Financial Relationships btw. Publ. Adm. and SOE ,1 34,7 96,9 Financial Ratios ,1 18,8 93,3 Public Service Provision Ratios ,3 11,1 223,6 Management Board ,7 27,8 118,3 Supervisory Body ,3 28,1 89,1 Personnel / Staff ,3 4,8 82,9 Audit ,9 10,2 206,3 No aggregate holdings reports could be identified for Australia, Belgium, Greece, Spain, and the United Stated of America * for United Kingdom: Whole of Government Accounts ** for France: Government as Shareholder Report Category Max. Points possible National Level ,1 20,6 57,4 AT - Austria CH - Switzerland DE - Germany EE - Estonia FR - France IL - Israel LT - Lithuania NL - Netherlands NO - Norway PT - Portugal SE - Sweden UK - United Kingdom Source: own research

19 Quality Model Nr. Criteria Dimension 1: Aggregate Information About the Investment Portfolio General Information 1 Release Date 2 Total number / legal forms of SOEs 3 Changes in the holdings portfolio (eg Privatisation, Remunicipalisation) 4 Date of acknowledgement by responsible political body (eg local council) 5 Note on subsidiarity principle for private law SOEs Organisation Chart and Summary Table 6 Organizational / summary table 7... contains portions of the city 8... contains height of share capital 9... contains in-house operations also includes indirect holdings majority-owned direct holdings marked majority-owned indirect holdings marked contains all holdings (for summary table) contains balance sheet totals of the respective SOEs (for summary table) contains the sales of the respective SOEs (for summary table) contains the employee number of the respective SOEs (for summary table) contains the share capital of each SOE (for summary table) includes the shares of the city in the SOEs (for summary table) 19 Overview of SOEs by business sectors Source: own research, based on Papenfuß (2014) Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 19

20 Quality Model Overview of Financial Ratios 20 Balance sheet totals of the SOEs compared to last year in comparison with min. 2 previous years 23 Total results (profit / loss offset) of all SOEs compared to last year in comparison with min. 2 previous years 26 Total of SOEs investments compared to last year in comparison with min. 2 previous years 29 Total subsidies to SOEs compared to last year in comparison with min. 2 previous years 32 Total profit transfer from SOE to public authority compared to last year in comparison with min. 2 previous years 35 Total loans / guarantees to SOEs compared to last year in comparison with min. 2 previous years Source: own research, based on Papenfuß (2014) Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 20

21 Quality Model Overview of the SOE Personnel / Staff 38 Total number of employees in SOEs compared to last year in comparison with min. 2 previous years 41 Comparison to the core administration compared to last year in comparison with min. 2 previous years 44 Total number of women in top management compared to last year in comparison with min. 2 previous years 47 Total proportion of women in top management compared to last year in comparison with min. 2 previous years 50 Total number of women on supervisory bodies compared to last year in comparison with min. 2 previous years 53 Total proportion of women on supervisory bodies compared to last year in comparison with min. 2 previous years 56 Total number of women on leading lower hierarchy levels compared to last year in comparison with min. 2 previous years 59 Total proportion of women on leading lower hierarchy levels compared to last year in comparison with min. 2 previous years Source: own research, based on Papenfuß (2014) Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 21

22 Quality Model Dimension 2: Information on Individual SOEs SOE in General 62 Contact details (phone or ) 63 Link to website or notice that no website available 64 Note to the office etc. which is exercising the shareholder function / is represented at shareholder meeting 65 All other shareholders and their respective shares in the SOE listed 66 Statement on compliance Corporate Goals 67 Subject matter of the SOE 68 Public purpose explained 69 Strategic and operational objectives 70 Outcome goals financial goal formalized (name of the key figures, not the expression) output and outcome objectives formalized (name of the key figures, not the expression) Financial Relationships Between City and SOE 73 Cash inflow from public authority to SOE (grants, franchise fees and guarantees) or explanation of no inflows compared to last year in comparison with min. 2 previous years 76 Cash outflow from SOE to public authority (profit transfer, reflux in the household) or explanation of no outflow compared to last year in comparison with min. 2 previous years Source: own research, based on Papenfuß (2014) Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 22

23 Quality Model Financial Ratios 79 Annual result compared to last year in comparison with min. 2 previous years 82 EBIT compared to last year in comparison with min. 2 previous years 85 ROI compared to last year in comparison with min. 2 previous years 88 Return on equity compared to last year in comparison with min. 2 previous years 91 Equity ratio compared to last year in comparison with min. 2 previous years 94 Provisions compared to last year in comparison with min. 2 previous years 97 Pension provisions compared to last year in comparison with min. 2 previous years 100 Borrowed capital compared to last year compared to min. 2 previous years 103 Leverage (borrowed capital to equity), alternatively debt ratio (borrowed capital to total capital) compared to last year compared to min. 2 previous years 106 Investment rate compared to last year compared to min. 2 previous years 109 Capitalisation ratio (fixed assets to balance sum) compared to last year compared to min. 2 previous years 112 Depreciation rate (depreciation to fixes assets) compared to last year compared to min. 2 previous years 115 Note on the use of annual result 116 Sum of all sponsoring activities compared to last year compared to min. 2 previous years 119 Five greatest sponsoring activities with volumes and beneficiaries compared to last year compared to min. 2 previous years Source: own research, based on Papenfuß (2014) Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 23

24 Quality Model Public Service Provision Ratios 122 Overview on relevant key performance indicators compared to last year compared to min. 2 previous years Management Board 125 Name of all members 126 Total remuneration 127 Individual remuneration for each member 128 Fixed and variable remuneration listed or note that there are no such components 129 Total pension plans for all members 130 Pension plans per individual member Supervisory Body 131 Note on forming of supervisory board or waiver declared 132 Name of all members 133 Function of all members 134 Responsibilities and profession of all members 135 Supervisory committees listed or absence declared 136 Indication whether compensation is paid or not 137 Total remuneration 138 Individual remuneration for each member Source: own research, based on Papenfuß (2014) Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 24

25 Quality Model Personnel / Staff 139 Number of all employees compared to last year compared to min. 2 previous years 142 Number of part-time employees compared to last year compared to min. 2 previous years 145 Number of trainees / apprentices compared to last year compared to min. 2 previous years 148 Number of women in the total staff compared to last year compared to min. 2 previous years 151 Proportion of women in the total staff compared to last year compared to min. 2 previous years 154 Number of women on the second hierarchical level compared to last year compared to min. 2 previous years 157 Proportion of women on the second hierarchical level compared to last year compared to min. 2 previous years 160 Number of women at the third hierarchical level (or declaration that no third level exists) compared to last year compared to min. 2 previous years 163 Proportion of women at the third hierarchical level (or declaration that no third level exists) compared to last year compared to min. 2 previous years 166 Average age of total staff Source: own research, based on Papenfuß (2014) Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 25

26 Quality Model Audit 167 Aggregated overview of all audit companies or examiners (or declaration that there is no audit) 168 Auditors listed for all SOEs (or declaration that there is no audit) 169 Starting time of auditors work 170 Total cost of the audit (or declaration that there is no audit) compared to last year compared to min. 2 previous years 173 Separate disclosure of audit fees and consulting fees compared to last year compared to min. 2 previous years Source: own research, based on Papenfuß (2014) Diffusion and Quality of Aggregate Holdings Reporting in 17 Countries 26

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