Abstract
This paper examines the effects of privatization on state enterprises in Ghana. Vodafone Ghana and Universal Merchant Bank were selected for this study. Primary data was obtained from 287 respondents through survey questionnaires together with secondary data from the published annual financial reports of the two companies. The results of the study showed that factors such as weak internal controls, bribery and corruption, mismanagement of resources, political interference for self-reasons, and increased debts influence the privatization of state enterprises. The results also showed that non-financial effects of privatization include the improved efficiency in delivering services to consumers. Financially, privatization leads to significant improvement in profits, liquidity, solvency and investments stance of state enterprises. It is recommended that there must be a well-drafted strategic policy to manage the privatization of state enterprises in respective of the government in power. Capacity building through training must be offered to employees of state enterprises to revolutionise the innovative abilities and outputs. Effective internal controls must be institutionalize to bolster the operational efficiency of state enterprises. Keywords : Factors, Financial Ratio, Performance, Privatization, State Enterprise DOI : 10.7176/RJFA/10-8-14 Publication date : April 30 th 2019
Highlights
Privatization in developing countries emerged as a policy issue amidst the debt crises and worsening fiscal budget performances in the seventies and the early eighties (Nwoye, 2011; Oppong, 2013)
Since most studies did not distinguish between the types of ownership, this paper provided new insight into the impact that post-privatization ownership structure has on firm performance
The efficiency was estimated through a bootstrapped data envelopment analysis, and followed in the second stage by a bootstrapped truncated regression. Their results provided evidence that (i) there were no significant differences in efficiency between the state-owned enterprises and their private counterparts before privatization; and (ii) the efficiency of newly privatized firms significantly increased after their privatization, while private competitors showed no significant improvement during the same post-privatization period
Summary
Privatization in developing countries emerged as a policy issue amidst the debt crises and worsening fiscal budget performances in the seventies and the early eighties (Nwoye, 2011; Oppong, 2013). Omran (2015) conducted a study on the Egyptian economy and evaluated the financial as well as the operating performance of newly privatized Egyptian state-owned enterprises and determines whether such performance differs across firms according to their new ownership structure. The efficiency was estimated through a bootstrapped data envelopment analysis, and followed in the second stage by a bootstrapped truncated regression Their results provided evidence that (i) there were no significant differences in efficiency between the state-owned enterprises and their private counterparts before privatization; and (ii) the efficiency of newly privatized firms significantly increased after their privatization, while private competitors showed no significant improvement during the same post-privatization period. These companies have over 1000 employees ranging from managers to operatives. Descriptive statistics of means, percentages and standard deviations analysed the Likert Scale of factors influencing privatization of state enterprises
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