The Performance of State-Owned Enterprises and Newly Privatized Firms: Does Privatization Really Matter?

FEEM Working Paper No. 73.2002

39 Pages Posted: 17 May 2002

See all articles by Mohammed Omran

Mohammed Omran

The Insurance Holding Company; Arab Academy for Science and Technology

Date Written: August 2003


While it is well documented that privatization leads to an improvement in the performance of state-owned enterprises (SOEs) following divestiture, it is argued that many of these studies do not consider the performance of control firms of similar pre-privatization situations, i.e. the performance of SOEs. By matching sample firms (privatized) to control firms (SOEs), we find that privatized firms do not exhibit significant improvement in their performance changes compared with SOEs, which might put into question the benefits of privatization in Egypt. However, the caveat here is that the findings of no significant differences between privatized firms and SOEs might be attributed to one or more of the following reasons: the SOEs specific characteristics, the power of the non-parametric test and/or the small sample size, and changes in the economic system in Egypt and/or the restructuring process of the SOEs. Nevertheless, with all due respect to the findings from the statistical tests, the interpretation of the evidence of this study could mean that privatization improved the performance of privatized firms, which is in turn could have had important spillover effects on SOEs. Indeed, a study over a longer period is needed before these results could be considered conclusive.

Keyword: SOEs, Privatization, Middle East, and Egypt

JEL Classification: G32, L33

Suggested Citation

Omran, Mohammed M., The Performance of State-Owned Enterprises and Newly Privatized Firms: Does Privatization Really Matter? (August 2003). FEEM Working Paper No. 73.2002, Available at SSRN: or

Mohammed M. Omran (Contact Author)

The Insurance Holding Company ( email )

7 Talet Herb Street

Arab Academy for Science and Technology ( email )

P.O. Box. 1029
College of Management and Technology
Miami, Alexandria
(203) 5482 532 (Phone)
(203) 5566 072 (Fax)

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