40 Pages Posted: 7 Jan 2003
Date Written: December 2002
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: 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