Privatisation in Developing Countries

32 Pages Posted: 5 Jul 2006

See all articles by Natalie L. Sutter

Natalie L. Sutter

University of Oklahoma - Division of Finance

William L. Megginson

University of Oklahoma


We survey empirical studies examining privatisations effects in developing economies. Most of these studies find that privatisation yields improvements in the operating and financial performance of divested firms, and only a handful document outright performance declines after privatisation. Almost all studies that examine post-privatisation changes in output, efficiency, profitability, capital investment spending and leverage document significant increases in the first four measures and significant declines in leverage. The studies examined here are far less unanimous regarding the impact of privatisation on employment levels in privatised firms. Studies that explicitly address the sources of post-privatisation performance improvement using data from multiple non-transition economies tend to find stronger efficiency gains for firms in regulated industries, in firms that restructure operations after privatisation, and in countries providing greater amounts of shareholder protection.

Suggested Citation

Sutter, Natalie L. and Megginson, William L., Privatisation in Developing Countries. Corporate Governance: An International Review, Vol. 14, No. 4, pp. 234-265, July 2006, Available at SSRN: or

Natalie L. Sutter

University of Oklahoma - Division of Finance ( email )

Norman, OK 73019
United States

William L. Megginson (Contact Author)

University of Oklahoma ( email )

307 W Brooks, 205A Adams Hall
Norman, OK 73019
United States
(405) 325-2058 (Phone)
(405) 325-1957 (Fax)


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