Liberalization, Corporate Governance and the Performance of Newly Privatized Firms PDF Download
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Author: Narjess Boubakri
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Book Description
This paper seeks to provide an answer to the following question: When and how does privatization work? Using a unique sample of 189 firms headquartered in 32 developing countries, we document a significant increase in profitability, efficiency, investment and output. Next, using univariate tests, we show that changes in performance are related to economic reforms and conditions and to corporate governance. For example, we find that privatization yields better results when it is preceded by stock market and trade liberalization. The results of a regression analysis then indicate that macroeconomic and corporate governance variables explain post-privatization performance improvements. In particular, economic growth, control relinquishment by government and foreign ownership are key determinants of profitability changes. We also find higher improvements in efficiency and output for firms from countries with more developed stock markets and where the protection of property rights is better. Finally, our results suggest that trade openness is an important determinant of post-privatization increase in investment.
Author: Narjess Boubakri
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Book Description
This paper seeks to provide an answer to the following question: When and how does privatization work? Using a unique sample of 189 firms headquartered in 32 developing countries, we document a significant increase in profitability, efficiency, investment and output. Next, using univariate tests, we show that changes in performance are related to economic reforms and conditions and to corporate governance. For example, we find that privatization yields better results when it is preceded by stock market and trade liberalization. The results of a regression analysis then indicate that macroeconomic and corporate governance variables explain post-privatization performance improvements. In particular, economic growth, control relinquishment by government and foreign ownership are key determinants of profitability changes. We also find higher improvements in efficiency and output for firms from countries with more developed stock markets and where the protection of property rights is better. Finally, our results suggest that trade openness is an important determinant of post-privatization increase in investment.
Author: NARJESS BOUBAKRI, JEAN-CKAYDE CLAUDE COSSET, AND OMRANE GUEDHAMI
Publisher:
ISBN:
Category :
Languages : en
Pages : 58
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Author: Narjess Boubakri
Publisher:
ISBN:
Category :
Languages : en
Pages : 57
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Book Description
Author: Cosset, Jean-Claude
Publisher: Montréal : HEC Montréal, Centre de recherche en e-finance
ISBN:
Category :
Languages : en
Pages : 36
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Author: Sami Ben Naceur
Publisher:
ISBN:
Category :
Languages : en
Pages : 59
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Book Description
The paper works with a sample of 95 newly privatized firms (NPFs) that went public through stock markets in four Middle East and North Africa countries (Egypt, Morocco, Tunisia and Turkey). We find that these firms experience significant increase in profitability and operating efficiency, and significant decline in employment and leverage. We also document strong performance improvements for firms that not relinquish control from the state, that are not sold to foreigners and that come from Egypt. Employment decline is more severe in Egypt and in firms where the state is no longer in control. Also, the results indicate that revenue firms and NPFs in Morocco yield significantly less leverage than control firms and those from other countries. As for the sources of these performance changes, we find that profitability change is negatively related to control relinquishment by the government and positively related with foreign ownership. Trade openness, change in real GDP over the privatization window, index of investor protection and foreign ownership are important determinants of the change in sales efficiency and output changes. These findings suggest that NPFs become more productive in environments where property rights are better protected and enforced and that foreign investors influence the firm's productivity through their monitoring role.
Author: Mohammed Omran
Publisher:
ISBN:
Category :
Languages : en
Pages : 16
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We examine and analyze the post-privatization corporate governance of a sample of 52 newly privatized firms from Egypt over the 1995-2005 period. We look at the ownership structure that results from privatization and its evolution; the determinants of private ownership concentration; and the impact of private ownership concentration, identity and board composition on firm performance. We find that the state gives up control over time to the private sector, but still controls, on average, more than 35 percent of these firms. We also document a trend in private ownership concentration over time, mostly for the benefit of foreign investors. Firm size, sales growth, industry affiliation, and timing and method of privatization seem to play a key role in determining private ownership concentration. Ownership concentration and ownership identity, in particular foreign investors, prove to have a positive impact on firm performance, while employees ownership concentration has a negative ones. The higher proportion of outside directors and the change in the board composition following privatization affect firm performance positively. These results could have some important policy implications; in which private ownership by foreign investors seem to add more value to firms; while selling state-owned enterprises (SOEs) to employees is not recommended. Also, the state is highly advised to relinquishes control and allow for changes in the board of director following privatization as changing ownership, per se, might not have an impact on firm performance unless it is coupled with new management style.
Author: Samer Ali Kobeissi
Publisher:
ISBN:
Category :
Languages : en
Pages : 156
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Book Description
Privatization has lately become a hot topic, especially in developing countries. There is more and more evidence that the success of privatization highly depend s on the corporate governance practices within a country as well as within the p rivatized firm itself. This paper presents an elaborate review of the previous l iterature on privatization and corporate governance, with special attention to t he internal and external control mechanisms that monitor firm's performance. Next, the paper focuses on privatization in the Arab World. It uses a sample of 18 firms to conduct an exploratory empirical analysis on the effect of privatiza tion on firm's performance and the link between post-privatization performance a nd corporate governance variables. In general, the privatized firms show improvements in performance, increase in o utput, and decrease in debt level and in investment level. There is also an impr ovement in stock performance on the long run. In terms of the effect of governance on performance, lower levels of government ownership are associated with higher profitability, higher level of investment, and lower debt level. Also, positive changes in board are associated with higher profitability, higher levels of output, and lower debt levels, but also with lo wer levels of investment. However, the relationship between governance variables and stock performance is not clear.
Author: Juliet D'Souza
Publisher:
ISBN:
Category :
Languages : en
Pages : 40
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During the second half of ...
Author: J. Harold Mulherin
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
The most important development in international corporate governance in the past 20 years has been the privatization of state-owned enterprises. There is evidence that privatization has resulted in improved firm performance but the source of this improvement is difficult to isolate. We argue that one of the most important results of privatization for corporate governance is the potential entry of those firms into the market for corporate control as targets and bidders, which can result in improved firm performance for numerous reasons. We document the magnitude and the wealth effects of the mergers of privatized firms, attempting to find every privatized firm that was either a target or a bidder in a merger. We find 52 privatized firms that subsequently become targets of takeovers and 90 privatized firms that became bidders in 341 mergers. In general, we find that privatized firms operate very much as non-privatized firms have in the market for corporate control. Target firms experience a 12 percent increase in equity value at the announcement of a merger. Bidding firms experience a positive but insignificant change in equity value at merger announcement. The results indicate that mergers result in net wealth creation for privatized firms and are indicative that one effect of privatization is wealth-creating mergers.
Author: Wanrapee Banchuenvijit
Publisher:
ISBN:
Category :
Languages : en
Pages : 270
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Book Description
This dissertation seeks not only to extend the existing privatization literature but also to provide the association between privatization and corporate governance literatures. It is divided into three essays. The first essay examines changes in the financial and operating performance of 103 firms worldwide that were partially or fully privatized through public share offerings during 1993-2003. The empirical results from the Wilcoxon and proportion tests show increases in profitability, operating efficiency, capital spending, output, and dividend payments as well as decreases in leverage and total employment. A combined result of this essay and the three previous and comparable papers indicates that, for the whole period from 1961 to 2003, privatization helps improve firm performance in a wide variety of countries, industries, and competitive environments. The second essay investigates the impact of macro corporate governance mechanisms (anti-director rights index, enforcement index, and corporate disclosure index) on the subsequent performance of 103 privatized firms around the world during 1993-2003. After controlling for endogeneity, the empirical results exhibit that macro governance mechanisms are important determinants of firm performance following privatization in both developed and developing countries. Finally, the third essay studies how internal control mechanisms (board size, board composition, CEO duality, and financial expertise of boards) affect the subsequent performance of 103 privatized firms around the world during 1993-2003. After controlling for endogeneity, the empirical results demonstrate that internal governance mechanisms (with the concentration on the role of board of directors) are important determinants of firm performance following privatization in only developing countries.
