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Management Control and Privatization in the United Kingdom

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  • Michael Ian Cragg
  • I.J. Alexander Dyck

Abstract

We examine the links between ownership and internal control for a sample of 112 state-owned, privatized, and publicly traded firms in the United Kingdom from 1970 to 1994. Privatized firms with at least four years in the private sector, like established publicly traded firms, exhibit a significant negative relationship between improved performance and the probability of resignation. Simulations using model estimates show a one-standard-deviation decrease in performance raises the probability of resignation by 90% in publicly traded firms and by 180% in established privatized firms. State-owned firms and privatized firms in their first four years show no relationship between the probability of resignation and changes in financial performance.

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  • Michael Ian Cragg & I.J. Alexander Dyck, 1999. "Management Control and Privatization in the United Kingdom," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 475-497, Autumn.
    • Handle: RePEc:rje:randje:v:30:y:1999:i:autumn:p:475-497
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    Citations

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    Cited by:

    1. Ariane Chapelle, 2004. "Separation between ownership and control: where do we stand?," Working Papers CEB 04-018.RS, ULB -- Universite Libre de Bruxelles.
    2. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, productivity and growth: OECD evidence [‘A model of growth through creative destruction’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(36), pages 9-72.
    3. Gloria Cuevas-Rodríguez & Jaime Guerrero-Villegas & Ramón Valle-Cabrera, 2019. "Privatization and organizational changes: Evidence from Spain," Working Papers 19.04, Universidad Pablo de Olavide, Department of Business Organization and Marketing (former Department of Business Administration), revised Jun 2019.
    4. Oum, Tae H. & Adler, Nicole & Yu, Chunyan, 2006. "Privatization, Corporatization, Ownership Forms and their Effects on the Performance of the World’s Major Airports," 47th Annual Transportation Research Forum, New York, New York, March 23-25, 2006 208026, Transportation Research Forum.
    5. Gloria Cuevas-Rodriguez & Jaime Guerrero-Villegas & Ramón Valle-Cabrera, 2014. "Privatization effects on corporate governance, strategy and compensation systems," Working Papers 14.03, Universidad Pablo de Olavide, Department of Business Organization and Marketing (former Department of Business Administration).
    6. Fidrmuc, Jana P. & Fidrmuc, Jan, 2006. "Can you teach old dogs new tricks? On complementarity of human capital and incentives," Journal of International Money and Finance, Elsevier, vol. 25(3), pages 445-458, April.
    7. Warzynski, Frederic, 2003. "Managerial change, competition, and privatization in Ukraine," Journal of Comparative Economics, Elsevier, vol. 31(2), pages 297-314, June.
    8. Xu, Wen & Uddin, Shahzad, 2008. "Public sector reforms, privatisation and regimes of control in a Chinese enterprise," Accounting forum, Elsevier, vol. 32(2), pages 162-177.
    9. OKTEN Cagla & ARIN Peren, 2010. "How Does Privatization Affect Efficiency, Productivity and Technology Choice? Evidence from Turkey," EcoMod2003 330700115, EcoMod.
    10. David Parker, 2004. "The UK's Privatisation Experiment: The Passage of Time Permits a Sober Assessment," CESifo Working Paper Series 1126, CESifo.
    11. Cambini Carlo & Filippini Massimo & Piacenza Massimiliano & Vannoni Davide, 2011. "Corporatization and Firm Performance: Evidence from Publicly-Provided Local Utilities," Review of Law & Economics, De Gruyter, vol. 7(1), pages 191-213, July.
    12. Jaime Guerrero-Villegas & Gloria Cuevas-Rodríguez & Ramón Valle-Cabrera, 2019. "Changes on resources provided by directors: A privatisation context," Working Papers 19.03, Universidad Pablo de Olavide, Department of Business Organization and Marketing (former Department of Business Administration), revised May 2019.
    13. Jiang, Kun & Wang, Susheng, 2022. "Internal labor markets with two types of promotion and two tiers of salary: theory and evidence from China," China Economic Review, Elsevier, vol. 72(C).
    14. Nicholas Crafts & Mary O'Mahony, 2001. "A perspective on UK productivity performance," Fiscal Studies, Institute for Fiscal Studies, vol. 22(3), pages 271-306, September.
    15. Alberto Chong & Virgilio Galdo, 2007. "Should state-owned firms change CEOs before privatization? Some evidence from the telecommunications industry," Applied Economics Letters, Taylor & Francis Journals, vol. 14(8), pages 591-595.
    16. Yu, Wusheng & Jensen, Trine Vig, 2003. "Trade Preferences, WTO Negotiations and the LDCs: the case of the "Everything But Arms" Initiative," Conference papers 331124, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Oum, Tae H. & Adler, Nicole & Yu, Chunyan, 2006. "Privatization, corporatization, ownership forms and their effects on the performance of the world's major airports," Journal of Air Transport Management, Elsevier, vol. 12(3), pages 109-121.
    18. Schnytzer, Adi & Andreyeva, Tatiana, 2002. "Company performance in Ukraine: is this a market economy?," Economic Systems, Elsevier, vol. 26(2), pages 83-98, June.

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