The Performance of Newly Privatized Firms in Selected MENA Countries: The Role of Ownership Structure, Governance and Liberalization Policies

59 Pages Posted: 21 Mar 2006

See all articles by Sami Ben Naceur

Sami Ben Naceur

International Monetary Fund (IMF)

Samir Ghazouani

Higher School of Statistics and Information Analysis (ESSAI)

Mohammed Omran

The Insurance Holding Company; Arab Academy for Science and Technology

Date Written: March 2006

Abstract

The paper works with a sample of 95 newly privatized firms (NPFs) that went public through stock markets in four Middle East and North Africa countries (Egypt, Morocco, Tunisia and Turkey). We find that these firms experience significant increase in profitability and operating efficiency, and significant decline in employment and leverage. We also document strong performance improvements for firms that not relinquish control from the state, that are not sold to foreigners and that come from Egypt. Employment decline is more severe in Egypt and in firms where the state is no longer in control. Also, the results indicate that revenue firms and NPFs in Morocco yield significantly less leverage than control firms and those from other countries. As for the sources of these performance changes, we find that profitability change is negatively related to control relinquishment by the government and positively related with foreign ownership. Trade openness, change in real GDP over the privatization window, index of investor protection and foreign ownership are important determinants of the change in sales efficiency and output changes. These findings suggest that NPFs become more productive in environments where property rights are better protected and enforced and that foreign investors influence the firm's productivity through their monitoring role.

Keywords: Privatization, Ownership Structure, Corporate Governance, Economic Liberalization, and MENA Countries.

JEL Classification: G3, F3

Suggested Citation

Ben Naceur, Sami and Ghazouani, Samir and Omran, Mohammed M., The Performance of Newly Privatized Firms in Selected MENA Countries: The Role of Ownership Structure, Governance and Liberalization Policies (March 2006). Available at SSRN: https://ssrn.com/abstract=889327 or http://dx.doi.org/10.2139/ssrn.889327

Sami Ben Naceur

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Samir Ghazouani

Higher School of Statistics and Information Analysis (ESSAI) ( email )

6, Rue des métiers
Charguia II, 2035
Tunisia
+216 70 839 440 (Phone)
+216 70 838 170 (Fax)

Mohammed M. Omran (Contact Author)

The Insurance Holding Company ( email )

7 Talet Herb Street
Cairo
Egypt

Arab Academy for Science and Technology ( email )

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

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