Post Privatization Research Articles

Financial Performance of Privatized State Owned Enterprises (SOEs) in Vietnam

The literature on public financial management reform has devoted comparatively little attention to the detail and effect of reform process implementation in developing economies. This study contributes to an understanding of this phenomenon by examining the impact of privatisation on a sample of previously state owned enterprises in Vietnam. Using a detailed, financially focused methodology and drawing on data sourced from audited general purpose financial statements, our analysis suggests evidence of material variation in financial performance and position post privatisation compared to the position observed immediately prior to privatisation. Specifically, our data suggests that after being privatized, firms generally exhibit reductions in profitability, improved liquidity, some degree of improvement in working capital management, an increase in financial leverage accompanied by a higher degree of solvency risk and greater calls on cash resources for the purpose of funding capital expenditure. Our results assist with understanding the impact of privatisation as a reform technique in developing economies, and may assist policy makers and managers better target areas of likely risk, during the process of transition from public to private ownership.

‘We're Here to Make Money; We're Here to Do Business’: Privatisation and Questions for Trade Unions

Australia has been one of the world's leading proponents of privatisation. One of the key arguments about privatisation is that it would end the inefficient state monopoly of public services and reduce the power of public sector trade unions. Within a relatively short period of the privatisation of the energy and transport sectors in Victoria Australia, there was a reconsolidation of ownership which raised new challenges for the trade unions. After this phase, the main trade unions in these two sectors took steps to meet these new circumstances to renew and rebuild their structures and strengthen their capacity to challenge the new private oligopolies. Thus, paradoxically some unions were able to open up space to renew and rebuild in the post–privatisation world.

The Impact of Financial Liberalisation on the Performance of Privatised Banks in Nigeria

This study compares the pre and post privatisation performance of ten banks that experienced privatisation through public share offering during the first phase of the Nigerian's liberalisation policy. The study examines whether the financial and operating performance of the privatised banks improved after privatisation. The wilcoxon signed rank test was used as the principal method of testing for significant changes in profitability, operating efficiency, and dividend payout. We also used the wilcoxon two-sample test for our sub-sample, which involves a test on whether the mean difference in variable values between the privatised banks in our sub-sample is zero. The study documented significant increases in the mean levels of profitability, operating efficiency, and dividend payout. Even though capital investments ratio revealed a mixed result, our study documented sufficient evidence, which shows that the privatisation exercise is accompanied by profitability and efficiency gains on the part of the privatised banks. In order to determine the factors that are responsible for the success of the privatisation programme in Nigeria, we further sub-dividend the sample into whether the banks changed their chief executives after privatisation or not and whether the composition of the board of directors remain as it were before the privatisation programme. Most of the privatised banks witnessed a marked turnover in the composition of their board of directors after privatisation. Although, our study did not reveal any significant difference in terms of banks that change their chief executives and those that retained them after the privatisation, the impact of human capital on bank's performance cannot be undermined. In overall therefore, our results lend support to the proposition that privatised banks in Nigeria witnessed performance improvement following government's liberalisation programme.

Endogena korupcija kao ravnoteza sekvencijalne igre

In this paper power struggle over the control of an insider privatized firm is modeled as a sequential game with perfect information. The endogenous corruption is a consequence of an insider privatization plan, where employees obtain majority of shares. In the post privatization game three players are dominant: managers, employees, and outside owners. Managers are by far the strongest player, with their key position in privatized firms despite their minority ownership stake. Since managers control working conditions of employees-cum-owners, they exercise an unparalleled power. Motivational structure is given for each player. Their ranked lists of goals and fears are necessary in order to specify parameters for the model. The game is modeled in an extensive form, and backward induction suggests a coalition of insiders (managers and employees) against the interests of outsiders. Under stated conditions, the equilibrium strategy results in an endogenous corruption.

Can Fiscal Policy Explain Technical Inefficiency of Privatised Firms? A Parametric and Non-Parametric Approach

The massive interests of economic literature about the privatisation gave a notable impulse to the discussion about this theme in the pre and post privatisation firms performance. Basically in every case after privatisation the level of profit increases. Does this mean that privatisation is certainly able to increase efficiency? In this field a large part of the literature leave out the complex problem that public firms usually are subject to objectives and constraints that differently from private firms can affect the overall economic efficiency. Unfortunately many authors ignore the effects of taxation during the process of privatisation, but in real term there are significant tax issues that must be considered by public and private decision maker. In this paper we concentrate the attention on the efficiency measures with the purpose to identify and measure sources of successful performance that can be used in policy planning and allocation of resources. Several techniques to calculate these frontier functions have been used, some of them parametric, others non-parametric to empirically investigate the relationship between taxation on firm's income and efficiency in the period pre and post-privatisation. In this work we use both econometric and mathematical programming approaches for measuring efficiency. The econometric tool provide maximum likelihood estimates of a stochastic production and cost functions to distinguish noise from inefficiency. Instead, the mathematical programming approaches are non-stochastic and they do not make strict assumptions on the functional form of production and the statistical properties of the data. The general results obtained from the 3 different tools (Stochastic Frontier, Data Envelopment Analysis and Neural Network) are consistent. In fact, we see that privatization enhanced efficiency in three out of four sample firms.

La privatisation de la poste néerlandaise 1989 - 1997

The holding KPN (Netherlands Post Office) was created in 1988; it gathers several companies that previously were part of the Dutch postal administration. KPN is floated in the Netherlands and in the USA. The privatization process is generally considered as fully successful, with post privatization yearly profits increased by 50% in less than ten years. This success is largely explained by the careful preparation of the privatization reform, the strong consensus reached within the Netherlands, and KPN' s very profitable monopoly on its home market. Its postal services subsidiary, PTT Post, which was fora long time accused of hindering the group's growth, achieved a remarkable performance when it acquired the Australian group TNT, one of the world's leading groups in international mail. PTT Post managed to grow through a strategy of internationalization and technical and commercial innovation (in a domestic market that was initially expected to shrink). However, this remarkable performance brings little benefit to domestic customers due to the absence of public regulation. Besides, KPN showed signs of fragmentation and increased vulnerability.

Regulatory Conflict? Environmental and Economic Regulation of Electricity Generation

Implementation of policies aimed at reducing atmospheric emissions has drawn attention to the need to integrate policies aimed at protection of the environment into other policy areas such as energy. In this paper we are concerned with the interaction of environmental policies aimed at reducing pollution, and economic policies aimed at reducing market power, in the electricity generation industry. While our analysis focuses on the post privatisation experiences in England and Wales, the analysis is intended to be of a wider applicability. In a theoretical model we find that there are welfare gains to be made from a move from the current non-cooperative regulatory regime to co-operative regulation between the environmental and economic regulators - a result that holds for the alternative environmental policies of a technology standard and an emissions tax.

Regulatory conflict? Environmental and economic regulation of electricity generation

Implementation of policies aimed at reducing atmospheric emissions has drawnattention to the need to integrate policies aimed at protection of the environment intoother policy areas such as energy. In this paper we are concerned with the interactionof environmental policies aimed at reducing pollution, and economic policies aimed atreducing market power, in the electricity generation industry. While our analysisfocuses on the post privatisation experiences in England and Wales, the analysis isintended to be of a wider applicability. In a theoretical model we find that there arewelfare gains to be made from a move from the current non-cooperative regulatoryregime to cooperative regulation between the environmental and economic regulators- a result that holds for the alternative environmental policies of a technology standardand an emissions tax.

The Competitive Order or Ordered Competition?: the ‘UK Model’ of Utility Regulation in Theory and Practice

This article contrasts the principles and prescriptions behind the UK model of utility regulation in the post–privatization period with its workings in actual practice, focusing in particular on the case of the telecommunications services industry as an exemplar of the broader picture.It diagnoses that the system has not evolved, as its primary architect (Littlechild) prescribed, into the rule – where feasible – of the competitive order in UK utility industries. Instead it has metamorphosed into a different system that Hayek termed ordered competition. The unintended consequences of this miscegenation are then evaluated.The conclusion is that a fundamental policy choice remains to be made as to the basic form of the system in the future: whether it should continue as a system of ordered competition as now, or whether it should become a regime characterized by open and effective competition (where feasible) as envisioned by Littlechild originally.

Tariffs and load management: a post privatisation study of the UK electricity supply industry

An electric utility can influence its customers' load by providing financial incentives through the prices charged for electricity at different times of use. By designing discriminatory time-of-use tariffs in which the price of electricity corresponds to the marginal cost of supply, a utility provides appropriate signals to the customer to increase consumption of electricity at off-peak periods. The utilization of off-peak electricity results in the improvement of power system load factor which is an indicator for the utilities to decide to defer investment in new generating and transmission capacity. The need to utilize off-peak electricity provides ample justification for the investigation of the determinants of the off-peak demand functions, customers response to discriminatory prices and their implication to system load management. Using the econometric approach, this paper reports a study of the British experience in the field of tariffs and load management in the case of the privatised electricity supply industry. The results of this study may be applicable to the Regional Electricity Companies in the UK. The utilities in several developing countries may find this study relevant, if they decide to restructure their industry for increasing efficiency and tariff for implementing load management instead of arbitrary load shedding.< <ETX xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">&gt;</ETX>