Privatisation and Performance in Ireland

Of the various reasons put forward in support of privatisation, the goal of improving enterprise efficiency is the most prominent. In general, empirical studies of privatisation have utilised measures of profitability and productivity in order to determine whether or not privatisation results in an improvement in performance. In line with studies such as Megginson et al. (1994), D’Souza and Megginson (1999) and Dewenter and Malatesta (2001), this chapter examines the performance of privatised Irish SOEs using a number of standard measures of profitability and productivity. The use of accounting ratios in the measurement of performance, while open to criticism, can still provide valuable information. Financial indicators may be unsuitable where enterprises operate in imperfectly competitive markets and/or are prone to changes in accounting practices across time periods, but they are still widely used indicators of performance. Although more sophisticated performance measures (for example, total factor productivity indices) are generally preferred to accounting ratios, the use of these indicators is not possible for a number of the companies covered here, and they are therefore omitted in the interests of meaningful comparisons of performance.