The Effects of Changes in Corporate Governance and Restructurings on Operating Performance: Evidence from Privatizations
42 Pages Posted: 25 May 2006
Date Written: May 24, 2006
Using a sample of 161 firms (privatized from 1961-1999), our study offers evidence regarding how restructurings and corporate governance changes affect the firm's post-privatization performance. Prior to privatization, governments may choose to restructure firms through governance changes (i.e., establish relation with strategic foreign investors, implement employee share ownership plans) and/or restructurings (i.e., acquisitions, divestitures, re-capitalizations). We first extend the existing privatization research by documenting and describing these restructurings. We then conduct preliminary tests to examine whether such restructurings/governance changes have contributed to improvements in post-privatization operating performance. Our results suggest that both restructuring and changes in corporate governance are important determinants of post-privatization performance. We feel that our multi-national, multi-industry sample provides a broad perspective of share-issue privatizations and offers opportunities to identify potential sources of efficiency improvements in newly privatized firms.
Keywords: International financial markets, performance, privatization
JEL Classification: G15, G28, G38, L33
Suggested Citation: Suggested Citation