Academic journal article Review of Business & Finance Studies

Credit Policies in Southern Italy Solid Waste Firms

Academic journal article Review of Business & Finance Studies

Credit Policies in Southern Italy Solid Waste Firms

Article excerpt


The aim of the present work is to analyze how relations between financial choices and the capital structure of firms condition the business dynamics of the companies involved. The paper involves an analysis of the balance sheets for the three year period 2005-2007 of firms dealing with urban waste disposal in a region of Southern Italy. The results show how economic dynamics and current tariff policies have resulted in conditions of financial imbalance that, in more than one case, have led to financial bankruptcy. The massive credit given to insolvent public bodies has resulted in excessive risk exposure. The result is levels of debt that it is hard to imagine would be tolerated in companies working under normal market competition. This paper analyzes waste disposal companies dealing in a part of the country that has been defined as underutilized. This sample provides an interesting opportunity to study the policy implications of the crisis and failure of such companies.


KEYWORDS: Public Utility, Capital Structure


The expression "public service" has diverse definitions and interpretations. This is true especially at the scientific and academic levels because of the absence of any precise legal definition (Sorace, 2001). National legislation has never provided a definition of local public service, nor of public service in general, neither has it laid down a basis on which to build an exact description (Cattaneo, 1990). Indeed, it is this lack of a systematic frame of reference governing legislative measures that has made it impossible to arrive at a clear definition in the academic and theoretical field (Maggiora, 1 986; Fresa, 1983). There is no theoretical consensus on how to define public service. Various and often conflicting criteria are used to identify services which can be labelled public.

One line of theory suggests it is necessary to make use of subjective criteria. From this standpoint, ervices offered by public subjects or all those carried out by Public Administration in general can be defined as public (Borgonovi, 1984). From another theoretical view, it is essential to link the determination of public service to objective data. What is considered necessary is not the quality of the subject that undertakes the activity but rather the nature of the service. Thus, it is irrelevant whether the service provider is public or private. There is no shortage of authoritative theoretical positions that claim that the two approaches, if applied rigidly, can be inadequate because the definition of public service implies consideration of various criteria including: subjective, objective, teleological, institutional and so on (Zucchetti, 2002). In fact, to be defined as a public service, the goods and activities produced must respond to basic and widespread needs of the local community and to realize social, economic and civic ends (Landolfi, 1999).

Regarding local public services, legislators have taken up a midway position between the objective and subjective conception, privileging a mixed notion of public services. Article 112, first section of the legal decree 267/2000 on the one hand focuses attention on the role of the local body whose job it is to manage service provision. It tries to give some content to public service, by claiming that it must have as its aim the production of goods and activities to fulfil social ends and to promote the economic and civic development of local communities. This mixed notion adopted by the legislation does not pose any substantial limits to the activities of local government administrations in the Single Text formula. All activities to do with economic and social development are included except for those activities mentioned in the list of "functions".

Service allocation can be direct or indirect. In any event it must satisfy the needs of the local area under the control of the public service provider. In other words, the service is public as it is provided to the community and because of the fact that a public subject defines the characters which it assumes as obligations (Casetta, 1999). …

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