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Privatising national oil companies: Assessing the impact on firm performance

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  • Wolf, C.
  • Pollitt, M.G.

Abstract

This study empirically investigates the impact of privatisation on firm performance in the global oil and gas industry, where questions of resource control have regained widespread attention. Using a dataset of 60 public share offerings by 28 National Oil Companies it is shown that privatisation is associated with comprehensive and sustained improvements in performance and efficiency. Over the seven-year period around the initial privatisation offering, return on sales increases by 3.6 percentage points, total output by 40%, capital expenditure by 47%, and employment intensity drops by 35%. Many of our observed performance improvements are already realised in anticipation of the initial privatisation date, accrue over time, and level off after the initial ownership change rather than accelerate. Details of residual government ownership, control transfer, and size and timing of follow-on offerings provide limited incremental explanatory power for firm performance, except for employment intensity. Based on these results partial privatisations in the oil sector might be seen to capture a significant part of the performance improvement associated with private capital markets without the selling government having to cede majority control.

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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0811.

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Length: 24
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:cam:camdae:0811

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Web page: http://www.econ.cam.ac.uk/index.htm

Related research

Keywords: Privatisation; ownership; corporate performance; anticipation; oil and gas industry;

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References

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Cited by:
  1. Wolf, C. & Pollitt, M.G., 2009. "The Welfare Implications of Oil Privatisation: A Cost-Benefit Analysis of Norway’s Statoil," Cambridge Working Papers in Economics 0912, Faculty of Economics, University of Cambridge.
  2. Wolf, C, 2008. "Does Ownership Matter? The Performance and Efficiency of State Oil vs. Private Oil (1987-2006)," Cambridge Working Papers in Economics 0828, Faculty of Economics, University of Cambridge.

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