Fiscal and political determinants of local government involvement in public-private partnership (PPP)

Kopańska, Agnieszka; Asinski, Roman

doi:10.1080/03003930.2019.1635016

Cited by 18 publications

(10 citation statements)

References 37 publications

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“…Local government decisions made in conditions of fiscal constraint and political struggle can blur the MPP value-for-money aim. Polish municipalities, for example, with higher levels of indebtedness and stronger electoral competition had a higher probability of opening MPP tenders (Kopańska and Asinski 2019), while those depending more on state and European grants engaged less in MPP.…”

Section: Pros and Cons Of Municipal-private Partnershipsmentioning

confidence: 98%

“…Economic efficiency and 'value for money' are major rationales for MPP, assuming a superior capacity of the private sector, and opting to create a competitive environment for the provision of public services, in line with New Public Management principles (Kopańska and Asinski 2019;Siemiatycki 2015;van den Hurk 2018). MPP is particularly advantageous where municipalities lack management capacity and MPP may reduce cost-overruns and delays in completion -savings that overweigh higher financing and transaction costs of MPP.…”

Section: Pros and Cons Of Municipal-private Partnershipsmentioning

confidence: 99%

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The rise and fall (?) of public-private partnerships in Israel’s local government

Razin

Hazan

Elron

2020

Local Government Studies

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Municipal-private partnerships (MPP), including BOT concessions, joint municipal-private corporations, and leveraging municipally owned land to promote private investment, have become major tools of urban development, but the 2008 global crisis seemed to have changed attitudes towards their application. Based on documents and open-ended interviews, our study examines the apparent retreat from MPP in Israel. Results show that BOT lost appeal in the 2010s, particularly among fiscally sound cities and water and sewage municipal corporations, not because of an ideological rejection, but largely due to low interest rates that eliminated its financial motivation. Regulatory hurdles also played a role in luring municipalities away from MPP in the centralised Israeli context. However, BOT remains in the municipal development toolbox and the study points at 'maturation', moving away from the financial motive to the capacity motive, mainly in fields out of municipal core tasks and in projects sufficiently isolated from external uncertainties.

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Section: Pros and Cons Of Municipal-private Partnershipsmentioning

confidence: 98%

Section: Pros and Cons Of Municipal-private Partnershipsmentioning

confidence: 99%

The rise and fall (?) of public-private partnerships in Israel’s local government

Razin

Hazan

Elron

2020

Local Government Studies

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“…politicians, citizens, public officials and interest groups – interact to satisfy their own selfish needs (Buchanan, 2009). According to Kopań ska and Asinski (2019) and Stalebrink and Sacco (2006), reelection is the politicians' main goal, which creates an incentive to use public policy for their own advantage. Yet, the other market agents, who are also self-centered, actively attempt to maximize their own utility, putting considerable pressure on the politicians.…”

Section: Background and Research Hypothesesmentioning

confidence: 99%

Earnings management in municipal firms: evidence from Portugal

Coelho

2022

JPBAFM

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PurposeThis paper investigates the earnings management (EM) practices of Portuguese municipal firms (MFs), which are a special type of public-sector entity.Design/methodology/approachMFs are identified using a dedicated list maintained by the Portuguese Government. Accounting data are collected from the Bureau Van Dijk's AMADEUS database. The Burgstahler and Dichev's (1997) methodology and panel data regression methods are employed to examine the EM practices of Portuguese MFs.FindingsPortuguese MFs manage earnings to report small and positive net earnings and to avoid disclosing losses. There is evidence that such companies are more likely to engage in EM practices when facing higher liquidation risk and financial leverage, lower liquidity and in certain periods of the local election cycle.Originality/valueThis is one of the first studies investigating the EM practices of MFs, directly contributing to the literature that explores the relationship between state ownership and the quality of financial statements. The paper has important implications for the MFs' stakeholders, especially regulators and supervising authorities.

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“…Kopanska and Asinski (2019) show that more indebted LGs tend to open public‐private partnerships (PPPs), while LGs financed by grants are less engaged in PPPs. The mayors of LGs with stronger electoral competition are more likely to engage in PPPs.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The most critical part of a LG's budget is covered by transfers from the central government (60% for municipalities and 42% for cities). It is impossible to use those transfers to soften local budgets (Swianiewicz, 2014; Kopanska & Asinski, 2019). Less wealthy LGs receive more transfers and grants.…”

Section: Literature Reviewmentioning

confidence: 99%

Revenue diversification and municipally owned companies’ role in shaping the debt of municipalities

Białek‐Jaworska

2021

Ann Public Coop Econ

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We aim to identify the role of revenue diversification and the municipally owned companies’ financial flexibility in shaping the short‐term and the long‐term debt of municipalities in Poland and this debt's repayments. To reflect the impact of this agency relationship on the municipalities’ debt, we consider explanatory variables from two sectors: public and corporate finance. We merge data retrieved from the Local Data Bank, the financial and budget statements of municipalities, and the municipally owned companies’ financial and ownership data from the ORBIS database. We use the ordinary least squares method for cross‐sectional data and the ordinal logit model to estimate a firm's unused debt capacity. We show that a municipally owned company's leverage extends the long‐term debt capacity of municipalities via off‐balance sheet financing. The municipally owned companies’ financial flexibility helps municipalities increase their revenue diversification and shape their debt to cover capital spending despite limited fiscal autonomy under fiscal debt constraints. Unlike revenue diversification in the USA, revenue diversification in Poland does not allow Polish municipalities to reduce short‐term debt. We contribute to the literature by exploring the role of the municipally owned companies’ financial flexibility (leverage and unused debt capacity) in shaping a municipality's debt capacity.

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Fiscal and political determinants of local government involvement in public-private partnership (PPP)

Cited by 18 publications

References 37 publications

The rise and fall (?) of public-private partnerships in Israel’s local government

The rise and fall (?) of public-private partnerships in Israel’s local government

Earnings management in municipal firms: evidence from Portugal

Revenue diversification and municipally owned companies’ role in shaping the debt of municipalities

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