The Imperfect Match of Public Accountability of State-Owned Enterprises and Private-Sector-Type Financial Reporting: The Case of Italy

Capalbo, Francesco and Palumbo, Riccardo, The Imperfect Match of Public Accountability of State-Owned Enterprises and Private-Sector-Type Financial Reporting: The Case of Italy, Australasian Accounting Business and Finance Journal, 7(4), 2013, 37-50.

16 Pages Posted: 29 Sep 2012 Last revised: 10 Jan 2014

See all articles by Francesco Capalbo

Francesco Capalbo

Second University of Naples - Department of Economics; Seconda Universita degli Studi di Napoli

Riccardo Palumbo

University of Chieti-Pescara; European Capital Markets CRC

Date Written: September 28, 2012

Abstract

State-owned enterprises (SOEs) are legally private entities used in many jurisdictions to satisfy public needs, mostly through extensive consumption of public funds. While the nature of purposes pursued and of resources employed affects their accountability in a public sense, their financial reporting requirements are set on the basis of their legal form and this may end up generating a misalignment between accountability and reporting. Such a misalignment significantly impairs the effectiveness of financial reporting and limits the relevant public authorities’ ability to control. The case of Italian SOEs is a fine example. These were created as incorporated entities fully or partially owned by local governments willing to dislocate the production of public services, especially utilities. Such companies have benefitted, thanks to the chosen legal form, from a private style financial reporting model that has significantly eased the controls normally existing on public administrations, and which has favoured massive misuse of public funds and largely illegal management conducts. This paper advocates for significant amendments to the financial reporting model they inherit from the legal form, in order to realign their private-style accounting obligations with their public-style accountability.

Keywords: State-owned enterprises, Accountability, Reporting, Statement of Corporate Intent

Suggested Citation

Capalbo, Francesco and Palumbo, Riccardo, The Imperfect Match of Public Accountability of State-Owned Enterprises and Private-Sector-Type Financial Reporting: The Case of Italy (September 28, 2012). Capalbo, Francesco and Palumbo, Riccardo, The Imperfect Match of Public Accountability of State-Owned Enterprises and Private-Sector-Type Financial Reporting: The Case of Italy, Australasian Accounting Business and Finance Journal, 7(4), 2013, 37-50. , Available at SSRN: https://ssrn.com/abstract=2153899 or http://dx.doi.org/10.2139/ssrn.2153899

Francesco Capalbo (Contact Author)

Second University of Naples - Department of Economics ( email )

Corso Gran Priorato di Malta
Capua, Caserta 81043
Italy

Seconda Universita degli Studi di Napoli ( email )

Via Catullo 64
80122 Napoli, Caserta
Italy
0823 620218 (Phone)

Riccardo Palumbo

University of Chieti-Pescara ( email )

Via Luigi Polacchi 11
Chieti, Chieti 66100
Italy

HOME PAGE: http://www.unich.it

European Capital Markets CRC ( email )

Via Luigi Polacchi 11
Chieti, Chieti 66100
Italy

HOME PAGE: http://www.ecmcrc.org

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