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From state to private ownership: Issues from strategic industries

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  • Boubakri, Narjess
  • Cosset, Jean-Claude
  • Guedhami, Omrane
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    Abstract

    This paper investigates the effects of privatization for a panel of 189 firms from strategic industries headquartered in 39 countries, and privatized between 1984 and 2002. Strategic firms can hardly be compared to manufacturing or competitive industries as they are generally under state monopoly, and involve specific issues such as regulation, political and institutional constraints. We examine the change in ownership and postprivatization means of control by the government, and assess whether positive changes in performance obtain in these particular industries that include firms from the financial, mining, steel, telecommunications, transportation, utilities, and oil sectors. We document that governments continue to exert influence on former state-owned firms after three years by retaining golden shares and/or appointing politicians to key positions in the firm. Our multivariate results reveal a negative effect of state ownership on profitability and operating efficiency, which the presence of a sound institutional and political environment moderates.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 33 (2009)
    Issue (Month): 2 (February)
    Pages: 367-379

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    Handle: RePEc:eee:jbfina:v:33:y:2009:i:2:p:367-379

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    Web page: http://www.elsevier.com/locate/jbf

    Related research

    Keywords: L33 G34 Privatization State ownership Strategic industries Performance;

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    References

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    Citations

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    Cited by:
    1. Jiang, Guohua & Yue, Heng & Zhao, Longkai, 2009. "A re-examination of China's share issue privatization," Journal of Banking & Finance, Elsevier, vol. 33(12), pages 2322-2332, December.
    2. Thi QuyVo & Duc Khuong Nguyen & Fredric WilliamSwierczek, 2014. "Corporate performance of privatized firms in Vietnam," Working Papers 2014-240, Department of Research, Ipag Business School.
    3. Mouna Mrad & Slaheddine Hallara, 2014. "The Relationship Between the Board of Directors and the Performance/Value Creation in a Context of Privatization: The Case of French Companies," Public Organization Review, Springer, vol. 14(1), pages 83-108, March.
    4. Boggio, Margherita, 2012. "Municipal Capitalism: from State to Mixed Ownership in Local Public Services Provision," MPRA Paper 46245, University Library of Munich, Germany.
    5. Burki, Abid A. & Ahmad, Shabbir, 2010. "Bank governance changes in Pakistan: Is there a performance effect?," Journal of Economics and Business, Elsevier, vol. 62(2), pages 129-146, March.
    6. Knyazeva, Anzhela & Knyazeva, Diana & Stiglitz, Joseph, 2009. "Ownership changes and access to external financing," Journal of Banking & Finance, Elsevier, vol. 33(10), pages 1804-1816, October.
    7. Ilduara Busta & Evis Sinani & Steen Thomsen, 2014. "Ownership concentration and market value of European banks," Journal of Management and Governance, Springer, vol. 18(1), pages 159-183, February.
    8. Emita W. Astami & Greg Tower & Rusmin Rusmin & John Neilson, 2010. "The effect of privatisation on performance of state-owned-enterprises in Indonesia," Asian Review of Accounting, Emerald Group Publishing, vol. 18(1), pages 5-19, May.
    9. Boubakri, Narjess & Cosset, Jean-Claude & Saffar, Walid, 2013. "The role of state and foreign owners in corporate risk-taking: Evidence from privatization," Journal of Financial Economics, Elsevier, vol. 108(3), pages 641-658.
    10. Otchere, Isaac, 2009. "Competitive and value effects of bank privatization in developed countries," Journal of Banking & Finance, Elsevier, vol. 33(12), pages 2373-2385, December.
    11. Andrews, Matt, 2013. "Explaining positive deviance in public sector reforms in development," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    12. Haw, In-Mu & Ho, Simon S.M. & Hu, Bingbing & Wu, Donghui, 2010. "Concentrated control, institutions, and banking sector: An international study," Journal of Banking & Finance, Elsevier, vol. 34(3), pages 485-497, March.

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