Andrea Guerrini

Factors affecting the performance of water utility companies

Purpose – The purpose of this paper is to carry out an analysis of Italian water utility companies to determine whether their performance was related to certain relevant variables that have been broadly discussed in the existing literature. Among these are ownership structure, size and diversification. In addition, the paper considers another variable – the geographical location.Design/methodology/approach – The paper reviewed the annual financial statements of 80 Italian water utility companies between 2004 and 2008. It also obtained data regarding tariffs, volumes supplied and population served from Conviri, the Italian national authority for water. Finally, the paper discusses the significant differences among clusters, using parametric statistic methods.Findings – It was found that ownership structure, size, diversification and geographical location had an impact on the performance of water utility companies, although with different degrees of significance.Research limitations/implications – Further s...

Economies of Scale, Scope, and Density in the Italian Water Sector: A Two-Stage Data Envelopment Analysis Approach

Public utilities could improve their efficiency by pursuing specific strategies, such as growth, diversification of investments, or serving mainly high densely areas. For example, in the water sector, economies of scope and scale both appear possible, but extant literature does not offer clear or consensual findings. To address this lack of clarity, this article investigates the potential for efficiency improvement in the diverse Italian water sector, which comprises utilities of various sizes, operating in areas with various population densities and organized as mono- or multi-utilities. Technical and financial data from 64 different utilities were collected and then analyzed with a two-stage data envelopment analysis approach to reveal the impacts of different operational and exogenous variables on efficiency, including firm size, the degree of investment diversification, and customer density. The results obtained confirm the existence of all three types of economies (scale, scope and density), albeit with different impacts for each DEA score.

Ownership, Investment Policies and Funding Choices of Italian Water Utilities: An Empirical Analysis

Nowadays, the efficient management of water has become the focus of vast debate, both in the academic literature and in the practical and regulatory field. Due to the growing importance and scarcity of water resources, it has become crucial to better understand how to improve the organizational efficiency of water utilities. By adopting an accounting perspective and using statistical methods, this paper analyzes whether and to what extent investment and financial strategies differ among clusters of water utilities with different ownership structures. The paper focuses on the Italian water industry, a context considered particularly appropriate due to the coexistence of utilities with different ownership structures. The main results of the paper show that ownership affects the level of investment as well as the financial structure and costs of water utilities. The evidence provided by this study should encourage national governments and regulatory authorities to select water utilities with the greatest investment potential measured in terms of financial efficiency and effectiveness.

Measuring the efficiency of wastewater services through Data Envelopment Analysis

Efficient water management is a priority in the European Union, since the operational efficiency of many water utilities is very low compared to best practice. Several countries are restructuring the water industry to save costs. Larger-scale operations and vertical integration are promoted to achieve scale and scope economies; however, the literature is not unanimous that such economies exist. There is also little evidence of the effect of customer density on costs. This article offers some insights into this matter, analysing the Danish water industry by a two-stage Data Envelopment Analysis approach to investigate the effects of size, scope and density in the wastewater industry. The results show that the Danish wastewater industry is positively affected by vertical integration and higher population density: firms that serve more than 100 person per km of sewer and combine water and wastewater services achieve better efficiency. Size does not have any significant influence on global efficiency, although technical pure efficiency decreases statistically with firm size.

Factors Affecting Water Utility Companies’ Decision to Promote the Reduction of Household Water Consumption

The present paper investigates the factors affecting water utility companies’ decision to implement public information campaigns aimed at promoting sustainable water use and reducing household water consumption. We have analyzed 114 Italian water utility companies. For each we hand-collected data regarding their suggestions for reducing household water consumption and sustainable reporting information, published on the corporate websites. We then classified each utility on the basis of their ownership, diversification, location, sales, population served, tariff and annual rainfall. Using M-quantile regression for count data we have constructed a performance measure of Italian water utility companies and have ranked them by the identification of a unique M-quantile coefficient associated with each datum observed. The paper provides some interesting insights into the type of companies most sensitive to water sustainability issues, providing potential guidance to policy makers in defining a water management framework and selecting firms to manage water services. Larger firms located in the center of Italy, in drought regions and the driest areas, seem to be more sensitive to promoting the reduction of household water consumption. Moreover, companies operating only in the water business that are publicly owned and apply lower tariffs embody the type of institutions that make greater use of web information campaigns to reduce consumption.

Corporate governance and accounting enforcement actions in Italy

Purpose - The purpose of this study is to examine whether there is a relation between corporate governance and the publication of corporate accounts that fail to comply with legal and regulatory provisions governing their preparation. Design/methodology/approach - The paper analyses all the Italian listed companies that from 2002 to 2010 were subject to accounting enforcement actions. From the literature review, 11 hypotheses were developed in relation to six issues: CEO Chairman duality, board size, board independence, the presence of an audit committee and its composition, the presence of nomination and remuneration committees and, finally, the presence of a big audit firm. Using non parametric tests, the paper compares the governance characteristics of fraudulent firms with those of a control sample of comparable firms. Findings - It is found that board independence is the sole effective mechanism in detecting financial reporting fraud. The results show that firms committing accounting fraud have a lower percentage of independent directors on the board and fewer non-executive and independent directors on the audit committee than the matched control sample. Research limitations/implications - The main limit of this research is the small number of companies observed, even if this limit reflects the size of the Italian Stock Exchange. Another caveat is the endogeneity problem that impacts much of the board literature. Originality/value - This paper extends the accounting literature related to financial reporting fraud since it analyses the issue for the first time with reference to Italy, one of the most relevant European Union countries.

Cost Savings in Wastewater Treatment Processes: the Role of Environmental and Operational Drivers

In this study, 139 Tuscan Wastewater Treatment Plants (WWTPs) were analyzed with the aim of evaluating their efficiency and highlighting the main efficiency drivers, as well as distinguishing among wastewater features, WWTP technology, other features of WWTPs, output variables, and sludge disposal. From a methodological point of view, the proposed method includes an ordinary least squares analysis of total plant costs regressed on a set of 28 exogenous variables and a two-stage Data Envelopment Analysis model, where efficiency scores are obtained through weight restrictions. Moreover, the results of this study demonstrate that, with the exception of the “other features of WWTPs”, all other clusters of variables exert a negative effect on cost savings; in other words, larger scale of operations and higher usage of the productive capacity (grouped as “other features of WWTPs”) can improve cost efficiency.

Water Management in Italy

Introduction.- The Italian water industry.- The determinants of water utilities performance.- Investments policies and funding choices.- Water demand management and sustainability.- Conclusions.

Public vs. Private in Hospital Efficiency. Exploring determinants in a competitive environment

ABSTRACT This study investigates the determinants of efficiency in an Italian regional health system and estimates the effect exerted by ownership on hospitals’ performance. To achieve this aim, the Veneto region was considered as a case study and a full dataset (2011–2012) containing nonpublicly available technical data and cost and income items was analyzed. Efficiencies are measured applying a three-stage data envelopment analysis (DEA). Our results suggest that private hospitals perform better than public hospitals in productivity and cost saving, not considering the effect of other environmental and operational variables such as length of stay and beds per capita.

Water pollution in wastewater treatment plants: An efficiency analysis with undesirable output

Abstract The environmental efficiency of 96 Tuscan (Italian) wastewater treatment plants (WWTPs) is investigated taking into account the quality of the outgoing water in terms of pollutant. In this regard, the presence of the residual nitrogen in the outgoing treated water is considered as undesirable output. The efficiency analysis is performed by applying a novel integrated Analytic Hierarchy Process/Non-radial Directional Distance Function (AHP/NDDF) approach, combining the benefits of the two techniques. Similarly to the standard NDDF approach, the suggested model allows to include simultaneously inputs, desirable and undesirable outputs and not to overestimate the efficiency scores. At the same time, the AHP inclusion gives the possibility to directly take into account the decision maker preferences in the weighting system and to encompass some existing directional distance function models as special cases. The obtained results are then used to identify the efficiency explanatory variables: among them, the facilities’ capacity, the percentage of wastewater discharged by the industrial and agricultural activities and the level of compliance with the pollutant concentration threshold set by the legislator have a significant impact on the WWTP performance. The integrated performance assessment allows the water authorities to combine the WWTP efficiency together with the environmental sustainability issue and it has the potential for further promising environmental inspections.