Is Privatization a Socially Responsible Reform?

55 Pages Posted: 22 Feb 2016 Last revised: 25 Jan 2019

See all articles by Narjess Boubakri

Narjess Boubakri

American University of Sharjah - School of Business and Management; HEC Montreal - Department of Finance

Omrane Guedhami

University of South Carolina - Moore School of Business

Chuck C.Y. Kwok

University of South Carolina - Darla Moore School of Business

He (Helen) Wang

West Virginia University - Department of Finance

Date Written: January 23, 2019

Abstract

We assess the link between corporate social responsibility (CSR) and government ownership using a unique sample of privatized firms (PFs) from 41 countries over the 2002 to 2014 period. We find that PFs have, on average, better CSR intensity than other publicly listed firms. Further tests show a nonlinear relation between residual state ownership and CSR intensity that depends on the trade-off between political objectives of the government and profit maximization objectives of private owners. In addition, country-level institutions affect the state ownership–CSR intensity relation, and PFs benefit from higher valuation and lower equity financing costs through improved CSR.

Keywords: Privatization, Corporate Social Responsibility (CSR), Ownership Structure, Institutions

JEL Classification: G32, G34

Suggested Citation

Boubakri, Narjess and Guedhami, Omrane and Kwok, Chuck C.Y. and Wang, He, Is Privatization a Socially Responsible Reform? (January 23, 2019). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2735619 or http://dx.doi.org/10.2139/ssrn.2735619

Narjess Boubakri

American University of Sharjah - School of Business and Management ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

HOME PAGE: http://www.aus.edu

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Omrane Guedhami (Contact Author)

University of South Carolina - Moore School of Business ( email )

Columbia, SC
United States

Chuck C.Y. Kwok

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-777-3606 (Phone)
803-777-3609 (Fax)

He Wang

West Virginia University - Department of Finance ( email )

Morgantown, WV 26506
United States

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