Is Privatization a Socially Responsible Reform?

50 Pages Posted: 22 Feb 2016 Last revised: 17 Jun 2018

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: March 15, 2016

Abstract

We assess the link between corporate social responsibility (CSR) and government ownership using a unique sample of newly privatized firms (NPFs) from 41 countries over the 2002 to 2014 period. We find that NPFs have, on average, better CSR performance than other publicly listed firms. Further tests show a nonlinear relation between residual state ownership and CSR performance 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 performance relation, and NPFs 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? (March 15, 2016). 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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