The Financial and Operating Performance of Newly Privatized Firms: Evidence from Developing Countries

Authors

  • Narjess Boubakri,

    1. Faculty of Administrative Sciences, Université Laval, Québec
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    • The authors are with the Faculty of Administrative Sciences, Université Laval, Québec. We gratefully acknowledge the financial support of the Programme d'analyses et de recherches economiques appliquées au développement international (PARADI), a Center for Excellence funded by the Canadian International Development Agency (CIDA). Many government agencies, embassies (particularly, the Canadian embassies), and companies around the world deserve our gratitude for their assistance in collecting the data. We would like to thank Benoît Boyer, John Cockburn, Lucie Courteau, Hubert de La Bruslerie, Bernard Decaluwé Klaus Fischer, Jean-Marie Gagnon, Campbell Harvey, Edward Kane, Jocelyn Martel, Seyed Mehdian, John Norsworthy, René Stulz (the editor), Jean-Marc Suret, Adrian Tschoegl, Luc Vallée and an anonymous referee for valuable comments and suggestions. We have also benefited from the comments of seminar participants at the University of Fribourg (Switzerland), the University of Ottawa, Université Laval, the 1995 PARADI Conference, the 1996 Academy of International Business meeting, the 1996 Financial Management Association meeting, and the 1997 French Finance Association international meeting. Finally, we are indebted to Patrick Chamberland, Jacqueline Chavez, and Josée Maltais for excellent research assistance.
  • Jean-Claude Cosset

    1. Faculty of Administrative Sciences, Université Laval, Québec
    Search for more papers by this author
    • The authors are with the Faculty of Administrative Sciences, Université Laval, Québec. We gratefully acknowledge the financial support of the Programme d'analyses et de recherches economiques appliquées au développement international (PARADI), a Center for Excellence funded by the Canadian International Development Agency (CIDA). Many government agencies, embassies (particularly, the Canadian embassies), and companies around the world deserve our gratitude for their assistance in collecting the data. We would like to thank Benoît Boyer, John Cockburn, Lucie Courteau, Hubert de La Bruslerie, Bernard Decaluwé Klaus Fischer, Jean-Marie Gagnon, Campbell Harvey, Edward Kane, Jocelyn Martel, Seyed Mehdian, John Norsworthy, René Stulz (the editor), Jean-Marc Suret, Adrian Tschoegl, Luc Vallée and an anonymous referee for valuable comments and suggestions. We have also benefited from the comments of seminar participants at the University of Fribourg (Switzerland), the University of Ottawa, Université Laval, the 1995 PARADI Conference, the 1996 Academy of International Business meeting, the 1996 Financial Management Association meeting, and the 1997 French Finance Association international meeting. Finally, we are indebted to Patrick Chamberland, Jacqueline Chavez, and Josée Maltais for excellent research assistance.

ABSTRACT

This paper examines the change in the financial and operating performance of 79 companies from 21 developing countries that experienced full or partial privatization during the period from 1980 to 1992. We use accounting performance measures adjusted for market effects in addition to unadjusted accounting performance measures. Both unadjusted and market-adjusted results show significant increases in profitability, operating efficiency, capital investment spending, output, employment level, and dividends. We also find a decline in leverage following privatization but this change is significant only for unadjusted leverage ratios. Our results are generally robust when we partition our data into various subsamples.

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