The Impact of Municipally Owned Enterprises on Corruption Risk in Local Governments

Municipally owned enterprises (MOEs) are a core legacy of new public management, yet their integrity implications remain disputed. Combining agency theory with a contingency perspective, this study examines (1) whether a larger MOE portfolio heightens municipal corruption and (2) whether that corruption is contingent on the transparency with which MOEs are governed. The analysis covers a cross-section of all 743 Italian municipalities exceeding 15,000 residents, linking reported corruption cases to the number of MOEs each city owns and a binary indicator of noncompliance with statutory disclosure requirements. Logistic regression results reveal no significant association between MOE numerosity. By contrast, failure to meet transparency obligations nearly doubles the odds of corruption episodes, even after controlling for population size and regional effects. The evidence therefore locates corruption risk not in corporatization per se but in opaque governance practices that amplify information asymmetries and weaken external oversight. The study concludes that effective integrity safeguards for hybrid public-private entities must prioritize enforceable disclosure, independent auditing, and clear accountability lines. The Italian case provides a benchmark for examining how transparency conditions corruption outcomes in corporatized service delivery.