Has privatization of state-owned enterprises in Iran led to improved performance?

Abstract

Purpose – The purpose of this paper is to study the effect of organizational change and privatization on the performance of state-owned enterprises (SOEs) using the data from Iranian firms during the period 1998-2006, and to test whether privatization leads to improved performance. Design/methodology/approach – The performance of these firms before and after privatization was examined. Pooled regression models were employed to assess the effect of privatization on performance indicators. Findings – The results show that privatization has not had a positive effect on the profitability of the firms listed on the Tehran Stock Exchange; rather, the effect has been negative. Moreover, the results reveal that privatization of these firms has had no effect on their sales effectiveness and efficiency; instead, the debts and risks of these firms has increased. Further, ownership reform is needed to remedy the situation. Research limitations/implications – The paper focuses on the effect of privatization on firm pe...