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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.

Suggested Citation

  • 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. 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.
    2. Ariane Chapelle, 2004. "Separation between ownership and control: where do we stand?," Working Papers CEB 04-018.RS, ULB -- Universite Libre de Bruxelles.
    3. Jana P. Fidrmuc, 2005. "The Effect of Ownership Structures on Managerial Disciplinary Mechanisms after Privatization in Slovakia," Working Papers wpn05-01, Warwick Business School, Finance Group.
    4. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, productivity and growth: OECD evidence," Economic Policy, CEPR;CES;MSH, vol. 18(36), pages 9-72, April.
    5. 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.
    6. 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.
    7. 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).
    8. 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.
    9. Warzynski, Frederic, 2003. "Managerial change, competition, and privatization in Ukraine," Journal of Comparative Economics, Elsevier, vol. 31(2), pages 297-314, June.
    10. OKTEN Cagla & ARIN Peren, "undated". "How Does Privatization Affect Efficiency, Productivity and Technology Choice? Evidence from Turkey," EcoMod2003 330700115, EcoMod.
    11. 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.
    12. 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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