Understanding self‐regulation for political control and policymaking: Effects of governance mechanisms on accountability

Abstract

Self‐regulation has become a crucial governance mechanism for policymaking and political control. Although governments have increasingly implemented self‐regulation, its effects are under‐researched. International policymakers highlight the role of self‐regulation in extending accountability and political control of state‐owned enterprises (SOEs). A key accountability area—attracting widespread public interest—is the level of executive directors' pay. Drawing on agency theory, this study analyzes 2,112 pay disclosures of 700 executive directors employed in 289 German SOEs between 2014 and 2017. The results indicate that both self‐regulation and its quality have significant effects on behavior control. Further, the complementary adoption of self‐regulation and law has the strongest effects on principals' and agents' behavior and awareness. For the debate on board composition, it is important to note that a higher proportion of politicians as directors on SOE boards weakens the effects of self‐regulation. Overall, this study enhances the theoretical understanding of self‐regulation and provides important policy implications.

Personnel governance of corporatized public services: Effects of executive resources and corporation forms on turnover

“…For the research question, Germany is a fruitful testing ground, (1) exceeding the existing insights on state‐owned enterprises on the federal level (Ennser‐Jedenastik, 2014a), (2) offering insights into the effects of political structures in multiparty systems surpassing existing studies (e.g., Boyne et al, 2010a; Petrovsky et al, 2017), (3) providing a rich set of profit‐making/not profit‐making MCs, and (4) providing comprehensive published executive pay data due to compensation disclosure laws and public corporate governance codes (Papenfuß & Schmidt, 2020).…”

“…The role of personnel governance is especially important in the public corporate governance system (Expert Commission G‐PCGM, 2021; Meyer et al, 2018; Papenfuß & Schmidt, 2020; Voorn & Genugten, 2021). Accordingly, appointing executives—occupying positions with great power and autonomy (Krause & Van Thiel, 2019; Papenfuß, 2020)—is a key personnel governance mechanism to enforce strategic/political priorities in the overall management of public service provision (Ennser‐Jedenastik, 2014a; Petrovsky et al, 2015; Rutherford & Lozano, 2018).…”

“…The creation of public corporations—majority‐owned enterprises of public authorities (OECD, 2015)—is a prominent approach to improve the performance in public service provision by enhancing executive autonomy and professionalism (Krause & Van Thiel, 2019; Tavares & Camões, 2010). However, operating with independent corporate status outside the traditional administrative system induces far‐reaching challenges for governance and political control (Christensen & Lægreid, 2003; OECD, 2015; Papenfuß & Schmidt, 2020).…”

Corporatization of public services

“…Grossi and Thomasson's (2015) study of Copenhagen Malmo Port highlights the profound difficulties directors of corporatized services confront when seeking to meet the accountability requirements for multiple stakeholders. In Germany, the mandatory corporate governance code for municipal corporations and a commitment to self‐regulation among the politicians and executive directors that manage them has been found to strengthen accountability (Papenfuss and Schmidt 2020). Klausen and Winsvold's (2021) study of Norwegian municipal enterprises highlights that the accountability of corporatized public services can be enhanced through operational meetings between local government managers and the directors of enterprises, with elected politicians retaining oversight of strategic matters.…”

Determinants of Local SOE Board Size and Composition: Evidence From England

“…In particular, to date, scant attention has been paid to variations in the size and composition of the boards of directors responsible for overseeing local SOEs, even though researchers have identified the salience of board characteristics for the management and performance of those SOEs (e.g. Monteduro et al, 2011;Papenfuß & Schmidt, 2021a, 2021b.…”