The Operating Performance of Newly Privatised Firms in Central European Transition Economies (original) (raw)
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Social Science Research Network, 2003
We examine operating performance of 154 Polish, Hungarian and Czech companies that were fully or partially privatized between January 1990 and December 1998. Overall, our results are different from results of similar studies on operating performance of companies privatized in developed and other developing countries (D'Souza and Megginson, 1999; Boubakri and Cosset, 1998). For example, privatized firms in our sample did not manage to increase profitability, and significantly reduced efficiency and output in the post-privatization period. Enterprises privatized through mass privatization programs (Czech SOEs) achieved lower profitability in the post-privatization period compared to their counterparts privatized through case-by-case method. Czech companies have also maintained much higher bank borrowings after privatizations then their Polish and Hungarian counterparts. We further document that private sector IPOs underperform their privatization counterparts in terms of profitability, efficiency, capital investments and output. Finally, firms' size does not seem to influence key performance measures in selected countries.
Privatisation in Central and Eastern Europe
1992
It is argued that the impact of privatisation should be seen on company performance and productivity. The effects of "levelling the playing field" between the old state sector (whether or not now privatised) and new entrants to the industry will also be considered. Privatisation, in the sense of the emergence of a de novo private sector using the fixed assets of former state owned firms purchased after bankruptcy or liquidation, can lead to industry-level supply responses to demand changes even in the absence of supply responses from current and former state owned firms. In this paper, the issues which have emerged in the early years of transition in the privatisation of state owned firms, in the awareness that any deficiencies that we might isolate in firm level supply responses may be made good by the activities of the new entrepreneurs are outlined. There are two objectives: (i) to highlight the range and variety of innovative policy towards privatisation that has emerged in the region. We seek to categorise a country by policy and by policy outcome; and (ii) to focus on the relationship between ownership, governance and enterprise performance. The paper contains five further sections: (i) the standard literature comparing state and private ownership as governance mechanisms; (ii) the particular problems posed by privatisation in the transitional context are briefly summarised; (iii) methods of privatisation; (iv) the outcome of the privatisation processes, in terms of who has actually ended up owning firms, for several of the most prominent countries, including Russia, Poland, Hungary and the Czech Republic, and (v) the impact of privatisation on enterprise performance. JEL Classification: L33.
2005
This study examines the operating performance of companies privatized in Central European Transition Economies between 1990 and 1998. Overall, we find no evidence of a significant improvement in operating performance after privatization. Contrary to the increasing empirical evidence for developed and developing countries, privatized firms in our sample experience a significant drop in efficiency and output. Our results indicate the importance of choice of a privatization method, and institutional environment for the performance of newly privatized firms in transition economies.
Evidence from Companies Privatized in Poland in 2008–20111
2016
Our study concerns the effects of Polish privatization program conducted in the years 2008–2011. After drawing a broad picture of this process, we investigate the performance of 59 companies from the sample of 458 enterprises that completed the privatization process under this program. We hypothesize that privatization increases a company’s profi tability, labor productivity, capital investment, plow-back ratio and leverage. The fi ndings of our study are partly ambiguous (with four hypotheses confi rmed and four rejected). Profi tability did not improve visibly, although a number of positive initiatives and improvements in performance occurred (such as cost reduction, improvement of operational effi ciency, higher investments, improvement of plow-back ratio and changes in capital structure). Our fi ndings suggest that privatization works, though its full effects need time to occur.
The Financial and Operating Performance of Privatized Firms during the 1990s
The Journal of Finance, 1999
This study compares the pre-and post-privatization financial and operating performance of 85 companies from 28 industrialized countries that are privatized through public share offerings between 1990 and 1996. We document significant increases in profitability, output, operating efficiency and dividend payments-and significant decreases in leverage ratios-for our full sample of firms after privatization, and for most subsamples examined. Capital expenditures increase significantly in absolute terms, but not relative to sales. Employment declines, but insignificantly. Combined with results from two previous, directly-comparable studies, these findings strongly suggest that privatization yields significant performance improvements.
2002
Initial ownership structures resulting from the mass privatisation programme were intended as transitional, whereas optimal would be set up gradually and would result from secondary transactions. Therefore, mass privatisation is typically considered successful if secondary transactions lead to improved ownership, in particular, with emergence of strategic investors. If this approach is correct, positive effects of mass privatisation are thus not shown only by companies remaining in control of initial owners but mostly by the companies that have already gone through secondary privatisation. Accordingly, the success of secondary sales is to be evaluated by how successfully companies perform after the sale to new owners. This paper attempts to verify empirically those assumptions. The econometric analysis of panel data, after correcting for a selection bias, shows that TFP (total factor productivity) growth is highest in public companies. In addition we found that the secondary privati...
The determinants of privatised enterprise performance in Russia
2001
Using data from a large enterprise-level panel designed to address this issue, we account for enterprise performance in Russia. We link performance to four aspects of the economic environment: enterprise ownership; corporate governance; market structures and competition; and financial constraints. We conclude that private ownership and improved performance are not correlated, though restructuring is positively associated with the competitiveness of the market environment. These findings on private ownership support those of previous studies, e.g. Earle and Estrin (1997). Moreover, we find evidence that financially unconstrained firms are better in their undertaking of restructuring measures then financially constrained firms. Further analysis suggests that causality runs from restructuring to financial constraint, rather than the reverse. Finally, our findings indicate strong complementarities between the four factors influencing improved company performance, confirming the view that these factors need to be considered jointly.