Partial Privatization and Firm Performance

40 Pages Posted: 7 Jan 2003  

Nandini Gupta

Indiana University - Kelley School of Business - Department of Finance

Date Written: December 2002

Abstract

Most privatization programs begin with a period of partial privatization in which only non-controlling shares of firms are sold on the stock market. Since management control is not transferred to private owners it is widely contended that partial privatization has little impact on firm behavior. This perspective ignores the role that the stock market can play in monitoring and rewarding managerial performance even when the government remains the controlling owner. Using data on the population of Indian state-owned enterprises we find that partial privatization has a positive and highly significant impact on firm sales, profits, and labor productivity.

Suggested Citation

Gupta, Nandini, Partial Privatization and Firm Performance (December 2002). FEEM Working Paper No. 110.2002. Available at SSRN: https://ssrn.com/abstract=363860 or http://dx.doi.org/10.2139/ssrn.363860

Nandini Gupta (Contact Author)

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3416 (Phone)
812-855-5875 (Fax)

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