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The Financial and Operating Performance of Privatized Firms in Sweden


  • Tatahi, Motasam

    () (European Business School London)

  • Heshmati, Almas

    () (Jönköping University, Sogang University)


This paper examines the change in operating and financial performance of Swedish firms that were either partly or fully privatized during the period of 1989-2007. Two different methods are used to empirically investigate the performance of privatized firms. First, accounting data prior to and after the privatization are employed to measure the operating performance of privatized firms. We have found no significant difference in performances under state and private ownerships. Second, a return-based event study is found useful to measure the financial performance of privatized firms, since all the firms in the sample that were privatized have used an initial public offering (IPO). This approach allows comparison to the rest of the IPOs that were launched in the same period. It is found that the cumulative returns for the privatized firms are significantly different to private counterparts. Overall results, however, show that the privatization in Sweden was not as successful as it might have been expected and in comparison with those in other countries.

Suggested Citation

  • Tatahi, Motasam & Heshmati, Almas, 2009. "The Financial and Operating Performance of Privatized Firms in Sweden," IZA Discussion Papers 3953, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3953

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    1. repec:hrv:faseco:33077889 is not listed on IDEAS
    2. Robert E. Anderson & Simeon Dejankov & Gerhard Pohl & Stijn Claessons, 1997. "Privatization and Restructuring in Central and Eastern Europe," World Bank Other Operational Studies 11576, The World Bank.
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    5. William L. Megginson & Robert C. Nash & Matthias Randenborgh, 1996. "The Record On Privatization," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(1), pages 23-35.
    6. Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. " The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-452, June.
    7. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
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    12. Schmidt, Klaus M., 1996. "Incomplete contracts and privatization," European Economic Review, Elsevier, vol. 40(3-5), pages 569-579, April.
    13. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    14. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, January.
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    More about this item


    Sweden; efficiency; performance measure; privatization; ratio analysis; event-study; public and private relationship;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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