The Privatization Dividend : A Worldwide Analysis of the Financial and Operating Performance of Newly Privatized Firms
The study described in this Note compared the pre- and post-privatization performance of 61 companies in 18 countries and 32 industries. These companies were sold to the public through a share issue and thus their comparable pre- and post-issue financial and accounting data could be obtained from the firms' offering prospectuses and annual reports. The study tested for increased profitability, increased operating efficiency, increased capital investment spending, increased output, and privatization without lowering employment levels. It tested for these results both for the full sample and for several subsamples: privatizations of firms in competitive and non-competitive industries, full and partial privatization, privatization involving firms headquartered in OECD countries and in developing countries, and "control" and "revenue" privatizations. It showed significant increases among newly private firms in profitability, output per employee, capital spending, and employment. It also found that the financial policies of these firms start to resemble those typically associated with private entrepreneurial companies--with lower leverage and higher dividend payout ratios. Although the data did not allow precise documentation of the causes of these performance improvements after divestiture, the study was able to rule out price increases as a frequent source of profitability increases. It also showed that privatization has a positive effect on a firm's operating and financial performance while maintaining employment.
| Main Authors: | , , |
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| Format: | Viewpoint biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
1996-02
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| Subjects: | DENATIONALIZATION, PERFORMANCE, ANALYSIS, PUBLIC ENTERPRISES, PROFITABILITY, PRODUCTION, EMPLOYMENT, OWNERSHIP, DIVIDENDS, OPERATING EFFICIENCY ACCOUNTABILITY, ACCOUNTING, ASSETS, BOARDS OF DIRECTORS, CAPITAL EXPENDITURES, CAPITAL MARKETS, CORPORATION, DEBT, DIVIDEND PAYOUT, ENTREPRENEURSHIP, FINANCIAL POLICIES, FIRMS, INFLATION, INVESTMENT SPENDING, JOB LOSSES, LABOR UNIONS, OPERATING EFFICIENCY, OPERATING LOSSES, PENALTIES, PRESENT VALUE, PRIVATIZATION, RETAINED EARNINGS, RETURN ON SALES, |
| Online Access: | http://documents.worldbank.org/curated/en/1996/02/696757/privatization-dividend-worldwide-analysis-financial-operating-performance-newly-privatized-firms http://hdl.handle.net/10986/11633 |
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| Summary: | The study described in this Note
compared the pre- and post-privatization performance of 61
companies in 18 countries and 32 industries. These companies
were sold to the public through a share issue and thus their
comparable pre- and post-issue financial and accounting data
could be obtained from the firms' offering prospectuses
and annual reports. The study tested for increased
profitability, increased operating efficiency, increased
capital investment spending, increased output, and
privatization without lowering employment levels. It tested
for these results both for the full sample and for several
subsamples: privatizations of firms in competitive and
non-competitive industries, full and partial privatization,
privatization involving firms headquartered in OECD
countries and in developing countries, and
"control" and "revenue" privatizations.
It showed significant increases among newly private firms in
profitability, output per employee, capital spending, and
employment. It also found that the financial policies of
these firms start to resemble those typically associated
with private entrepreneurial companies--with lower leverage
and higher dividend payout ratios. Although the data did not
allow precise documentation of the causes of these
performance improvements after divestiture, the study was
able to rule out price increases as a frequent source of
profitability increases. It also showed that privatization
has a positive effect on a firm's operating and
financial performance while maintaining employment. |
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