How Corporate Governance Afflicts Performances in the Airline Industry? A Regression Analysis Studying Corporate Structures and Firms Financial Performances of 41 European-based Airline Companies over a Ten Years Period from 2009 to 2018

Nicoletta Soranzo

Student thesis: Master thesis


Corporate governance started to acquire a certain relevance for academics during the last 30 years and the topic concerning the firms’ ownership composition occupied much of the first wave of corporate governance researches. Despite the huge number of studies developed, scholars today still argue if a particular ownership structure provides a better contribution to enhance firms’ performance. Therefore, my Master Thesis aims to investigate the relationship between ownership and firm financial performance with the intention to contribute in providing a more clear-cut response to this corporate governance issue.
This study focuses on the Airline industry, looking in particular at the European market, based on a sample containing data from41 European Airline companies over a 10 years period, during the period 2009 to 2018. Two different econometric model are developed, using 11 macroeconomic, financial and corporate independent variables and 3 dependent variables measuring firms’ financial performance. Appropriate tests are used to verify the absence of a multicollinearity issue, which would impede a correct estimation of the regression, and then the two different model have been tested once more using the panel data model regression. Regression results, in particular the R-square, reveal that the “goodness of fit” of my two different models goes from 14% to 31%, which means that the proportion of variance in the dependent variable that can be explained by the independent variable is not so vast. In addition, another regression has been conducted adding to the First model an interaction variable to see whether a particular ownership structure allows a firm to have quicker response to particular macroeconomic shocks, such as the case of the oil-price shock of 2014-2016.
The findings provide an empirical evidence of an outperformance of privately owned companies over public owned ones. These results are in line with other relevant literature researches, confirming that public owned firms are most easily distorted from the profit maximization goals leading to worsen firms’ financial performance. Moreover, my results do not show a dependence between the ownership structure and the effect of an oil price shock. However, results are not so solid and thus there is still a need for further research on this topic, maybe using a more wide and complete sample.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2020
Number of pages74
SupervisorsAleksandra Gregoric