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

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Author Info
Narjess Boubakri (Faculty of Administrative Sciences, Université Laval, Québec)
Jean-Claude Cosset (Faculty of Administrative Sciences, Université Laval, Québec)
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. Copyright The American Finance Association 1998.

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Article provided by American Finance Association in its journal The Journal of Finance.

Volume (Year): 53 (1998)
Issue (Month): 3 (06)
Pages: 1081-1110
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Handle: RePEc:bla:jfinan:v:53:y:1998:i:3:p:1081-1110

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