Clearing the fog for an overall view on state-owned enterprises: quality of aggregate holdings reporting by public administrations in 12 countries
| Author | Benjamin Friedländer,Ulf Papenfuß,Lars Steinhauer |
| Date | 01 March 2019 |
| DOI | 10.1177/0020852316681445 |
| Published date | 01 March 2019 |
| Subject Matter | Articles |
Review of
Administrative
Article
Sciences
International Review of
Administrative Sciences
2019, Vol. 85(1) 116–136
Clearing the fog for an overall
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DOI: 10.1177/0020852316681445
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enterprises: quality of
aggregate holdings reporting
by public administrations in
12 countries
Ulf Papenfuß
Zeppelin University, Germany
Lars Steinhauer
Leipzig University, Germany
Benjamin Friedla¨nder
Leipzig University, Germany
Abstract
In the context of current debates on sustainable public service provision, austerity, debts
and cutback management, the governance and management of and in state-owned enter-
prises is a crucial issue. An aggregate holdings report is an important tool for public admin-
istrations to provide accountability and the necessary overall view on the institutional
service provision structures of core administration and state-owned enterprises. On the
basis of a developed quality index with 175 test criteria, this study analyses the diffusion of
aggregate holdings reports in 17 countries and the quality of 12 existing reports at the
national level. First, the study provides a conceptual contribution for assessing aggregate
holdings reports and future research on the issues of the model categories. Second, for an
empirical contribution, the analysis enhances our state of knowledge on aggregate holdings
report diffusion and quality patterns. Findings show that, in many cases, public administra-
tions do not meet the requirements from theory and practice. Newer Organisation for
Economic Co-operation and Development and European Union members reach compar-
ably higher quality scores. This comparative study offers new insights that can enhance the
sustainable public management and control of state-owned enterprises.
Corresponding author:
Ulf Papenfuß, Zeppelin University, Chair for Public Management & Public Policy, Am Seemoser Horn 20,
88045, Friedrichshafen, Germany.
Email: ulf.papenfuss@zu.de
Papenfuß et al.
117
Points for practitioners
The Organisation for Economic Co-operation and Development’s OECD Guidelines on
Corporate Governance of State-Owned Enterprises, which were published after an intensive
consultation process in 2005 and revised in 2015, demand public authorities to develop
aggregate holdings reports that cover all SOEs, and make them a key disclosure tool
directed to the general public and politicians. This study develops a quality model for
assessing the quality of aggregate holdings reports. The model can also answer ques-
tions that are often raised in reform debates, such as ‘Which is the best aggregate
holdings report?’ or ‘Which aggregate holdings report can I use as a reference to further
develop my own aggregate holdings report?’. The model is a conceptual contribution
and the empirical results can be used for international bench-learning. They are also
useful for international organisations such as the European Union, Organisation for
Economic Co-operation and Development, World Bank, International Monetary
Fund, Chartered Institute of Public Finance & Accounting and development aid/cooper-
ation agencies in each country. The results of this study indicate that policymakers at
the national and international levels should give more emphasis to the diffusion and
quality of aggregate holdings reports and should reflect on establishing and revising legal
obligations for aggregate holdings reports because the recommendations of the
Organisation for Economic Co-operation and Development guidelines, as a soft-law
approach, are often not put into practice.
Keywords
aggregate holdings report, public corporate governance, quality, state-owned
enterprises
Introduction
Reforms in the provision of public services with new institutional arrangements
have made state-owned enterprises (SOEs) increasingly relevant in many countries.
Studies for different countries demonstrate the significant role of SOEs in terms of
their economic relevance and for providing public services (Bruton et al., 2015;
Millward, 2011). For public management research and for the big societal issues
such as sustainability, debt crises, cutback management and citizen engagement,
the governance and integrated management of core administration and SOEs is a
crucial issue (Askim, 2007; Haque, 1999; Kwon et al., 2013; OECD, 2015; Osborne,
2014). The changes in the institutional arrangements of public service provision
have led to new requirements in accountability and transparency. Governance
deficits have raised discussions in various countries about the control and trans-
parency of SOEs (Bach and Jann, 2010; Grossi et al., 2015; Massey, 2009; OECD,
2015; Verhoest et al., 2012; Vesely´, 2013; Whincop, 2005). The Organisation
for Economic Co-operation and Development (OECD) requires public admin-
istrations to publish an annual aggregate holdings report (AHR) on SOEs
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International Review of Administrative Sciences 85(1)
(OECD, 2015: s. VI, C). An AHR is the necessary basis for citizens to obtain a
systematical overview (OECD, 2015; Verhoest et al., 2012). For these reasons, it is
necessary and rewarding to examine how public authorities report on the perform-
ance, debts/credits and governance of their SOEs (Grossi et al., 2015; OECD,
2015). Despite this relevance, studies on this issue are sparsely available, and inter-
nationally comparative studies are especially missing. By now, there has only been
one publication which assesses AHRs at the local level in three countries based on a
first-quality model with 75 criteria (Papenfuß, 2014).
The aim of this study is to assess the diffusion and quality of AHRs in 17
countries at the national level. For this, a new model with 175 criteria is developed
as a conceptual contribution for assessing the quality of AHRs. After a section with
definitions, the study derives requirements for AHRs from theory and practice.
In the following, the empirical design is described and findings are presented.
The study concludes with key results, implications for practitioners and needs
for further research.
Definition and relevance of SOEs and AHRs
SOEs are defined as enterprises where the public authority has significant control
through full, majority or significant minority ownership (OECD, 2015). According
to some categorisations, SOEs are classified as type 2 (i.e. non-departmental public
bodies) or type 3 agencies (e.g. public corporations), in contrast to type 1 agencies
(i.e. next steps agencies) (Van Thiel, 2012). This study assesses the reporting on
agency types 2 and 3.
Worldwide, SOEs represent approximately 10% of global gross domestic prod-
uct (GDP) (Bruton et al., 2015). For Germany, empirical studies show that 50% of
the employees in the public sector work not in the core administration, but in SOEs
and comparable public organisations. SOEs undertake more than half of the public
sector’s investments and the debt ratio of SOEs is often even higher than that of the
core administration (Bertelsmann Foundation, 2008, 2013). For other countries,
studies show similar tendencies (Millward, 2011).
The OECD’s Guidelines on Corporate Governance of State-Owned Enterprises,
which were published in 2005 and revised in 2015, state that:
The ownership entity should develop aggregate reporting that covers all SOEs and
make it a key disclosure tool directed to the general public, the legislature and the
media. This reporting should be developed in a way that allows all readers to obtain a
clear view of the overall performance and evolution of the SOEs. In addition, aggre-
gate reporting is also instrumental for the ownership entity in deepening its under-
standing of SOE performance and in clarifying its own policy. (OECD, 2015: s. VI, C)
The guidelines represent internationally agreed standards for exercising the state
ownership function that should be obeyed by governments (OECD, 2015). For
public administration and policymaking, an AHR has to provide a complete
Papenfuß et al.
119
overview of the enterprise portfolio and single SOEs in order to organise service
provision in an overall, outcome-oriented and sustainable way, as well as to iden-
tify future potentials. For citizens, straightforward access to the information in
AHRs would offer better information opportunities about the service provision
that they are paying for. This could even foster and support the democratic process
in debates on tasks provided by SOEs.
Theory perspectives and conceptualisation of AHR diffusion
and quality
Theoretical perspectives on the diffusion of AHRs
For this study, diffusion is understood as the public availability of AHRs on the
public administrations’ websites. For explaining the diffusion of public manage-
ment reforms and instruments, neo-institutionalism is a common theoretical
approach (DiMaggio and Powell, 1983; Lægreid et al., 2007). DiMaggio and
Powell (1983) identify three types of isomorphism that explain a possible similarity
of organisations: coercive isomorphism, which results from political or legitimation
pressure; mimetic isomorphism as a result of uncertainty; and normative isomorph-
ism associated with professionalisation. For this study, these theoretical types can
help to discuss the findings on the diffusion and quality of AHRs and to reflect on
whether the empirical data show form(s) of isomorphism or not.
Since OECD and European Union (EU) guidelines and directives should or
have to be adopted by member states, there could be a tendency for...
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