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

Abstract

Local State-Owned Enterprises (SOEs) play an increasingly important role in the delivery of key public services to citizens across the world. Because they operate at arms’ length from their parent organizations, arrangements for the effective governance of local SOEs are a major concern for public administration researchers and policy-makers alike. In many countries, local SOEs are supervised by boards of directors responsible for managing and monitoring service provision. Agency theory suggests that the size and composition of these boards is likely to be influenced by the ownership structure, organizational complexity, and growth opportunities. Using seemingly unrelated regressions to analyse the size and composition of local SOE boards in England, this study finds that large, minority public-owned, not-for-profit SOEs and those with more public sector partners have larger boards of directors, and that older, majority public-owned, and not-for-profit SOEs have more politicians on the board. The theoretical and practical implications of these findings for the governance, accountability and performance of local SOEs are discussed.