Liberalization, Corporate Governance, and the Performance of Newly Privatized Firms

This paper seeks to provide an answer to the following question, namely when and how does privatization work? Using a unique sample of 201 firms headquartered in 32 developing countries, we document a significant increase in profitability, efficiency, investment and output. Next, using univariate tests, we show that corporate governance mechanisms and economic reforms and environment have an effect on the changes in operating performance. For example, we find that privatization yields better results when stock market and trade liberalizations precede it. The results of a regression analysis, across a number of specifications, indicate that economic reforms and environment as well as corporate governance variables explain the post-privatization performance changes. In particular, economic growth, control relinquishment by the government and foreign ownership are key determinants of profitability changes. We also find higher improvements in efficiency and output for firms in countries in which stock markets are more developed and where property rights are better protected and enforced. Finally, our results suggest that trade openness is an important determinant of the post-privatization increase in investment.http://deepblue.lib.umich.edu/bitstream/2027.42/39803/3/wp419.pd

Consolidation and Value Creation in the Insurance Industry: the Role of Governance

We examine the long run performance of M&A transactions in the property-liability insurance industry. We specifically investigate whether such transactions create value for the bidders' shareholders and assess how corporate governance mechanisms affect such performance. Our results show that M&A create value in the long run as buy and hold abnormal returns are positive and significant after three years. While tender offers appear to be more profitable than mergers, our evidence does not support the conjecture that domestic transactions create more value than cross border transactions. Furthermore, positive returns are significantly higher for frequent acquirers and in countries where investor protection is better. Internal corporate governance mechanisms are also significant determinants of the performance of bidders.Merger and acquisition, property-liability insurance, governance, value creation, performance of bidders

Postprivatization Corporate Governance: the Role of Ownership Structure and Investor Protection

We investigate the role of ownership structure and investor protection in postprivatization corporate governance. We find that the government relinquishes control over time, mainly to the benefit of local institutions and foreign investors. We also show that private ownership tends to concentrate over time. In addition to firm-level variables, investor protection, political and social stability explain the cross-firm differences in ownership concentration. We find that the positive effect of ownership concentration on firm performance matters more in countries with weak investor protection and that private domestic ownership leads to higher performance.Corporate governance, privatization, performance

Corporate Risk-Taking in Privatized Firms: International Evidence on the Role of State and Foreign Owners

Using a unique database of 190 newly privatized firms from 36 countries, we investigate the impact of shareholders’ identify on corporate risk-taking behavior. We find strong and robust evidence that state (foreign) ownership is negatively (positively) related to corporate risk-taking. Moreover, we find that these relations depend on the level of government extraction. Our results suggest that relinquishment of government control, openness to foreign investment, and improvement of country-level governance institutions are key factors in the success of privatization reform.Privatization, risk-taking, corporate governance

Importance of Agriculture in the Development Process: an Agricultural Model for Tunisia

A model for the Tunisian agriculture was developed. validated and then tested for different options and actions that could be undertaken in this sector. This model was conceived to serve as a basis for a close analysis of the sector and could serve as a starting point for the olanners in adapting a development model for the agr1culture. especially emphasizing the full use of the available potential and deriving the comparative advantage that best serves the welfare of the community.Economi

La privatisation tient-elle ses promesses? Le cas des pays en développement

La littérature sur la privatisation a récemment proliféré à la suite de l’essor considérable qu’a connu ce phénomène de par le monde. Cependant, la plupart des études ont porté sur l’expérience des pays industrialisés. Tout en passant brièvement en revue ces études, cet article met l’accent sur celles qui se sont intéressées aux pays en développement. Plus précisément, l’article décrit le phénomène de privatisation, les objectifs poursuivis par les gouvernements qui ont privatisé, les caractéristiques des programmes de privatisation et résume l’évidence empirique sur la performance financière et d’opération des entreprises nouvellement privatisées.Privatization has turned into a major phenomenon for the developed world as well as the developing world. However, few studies have examined the privatization phenomenon in developing countries. This paper surveys the literature on privatization with a particular emphasis on the developing world experience. It also describes the way privatization is implemented, the objectives followed by governments launching privatization programs as well as the observed patterns of these programs. Finally, the paper summarizes the empirical evidence on the financial and operating performance of newly privatized firms

Foreign Investor Participation in Privatizations: does the Institutional Environment Matter?

Using a two-stage estimation procedure, we examine the determinants of foreign investors' participation in the privatization process of developing countries, with a particular emphasis on the role of the institutional environment. First, we estimate the probability that foreign investors target privatized firms in a given country. We show that an investor-friendly institutional environment which protects shareholders' rights favors foreign investors' participation. Foreigners also prefer large firms from high growth economies and socially stable countries with low political risk. Second, we restrict our analysis to those firms that foreign investors actually choose. We show that the use of private sales is a key determinant of foreign investors' stake in a privatized firm.Privatization, Foreign participation, Institutions

Privatization and Globalization: an Empirical Analysis

This paper examines the link between globalization measured by foreign direct investment (FDI) and foreign portfolio investment (FPI) and privatization of state-owned enterprises in a multi-country sample that focuses on developing countries. We hypothesize that privatization has an effect on FDI/FPI as the process of fostering private sector participation was often accompanied by liberalization reforms, and by allocations of substantial shares in newly privatized firms to foreign investors. Similarly, we expect FDI/FPI to foster privatization efforts as new capital inflows, technology and managerial skills that accompany FDI/FPI make the environment more prone to competition, providing governments with incentives to privatize inefficient firms that need to be turned around. This relation is assessed in two ways, first in a dynamic panel using a generalized method of moments approach, and second through panel causality tests.Privatization, foreign direct investment, foreign portfolio investment, dynamic panel GMM, panel causality tests

La privatisation tient-elle ses promesses?

Privatization has turned into a major phenomenon for the developed world as well as the developing world. However, few studies have examined the privatization phenomenon in developing countries. This paper surveys the literature on privatization with a particular emphasis on the developing world experience. It also describes the way privatization is implemented, the objectives followed by governments launching privatization programs as well as the observed patterns of these programs. Finally, the paper summarizes the empirical evidence on the financial and operating performance of newly privatized firms. La littérature sur la privatisation a récemment proliféré à la suite de l’essor considérable qu’a connu ce phénomène de par le monde. Cependant, la plupart des études ont porté sur l’expérience des pays industrialisés. Tout en passant brièvement en revue ces études, cet article met l’accent sur celles qui se sont intéressées aux pays en développement. Plus précisément, l’article décrit le phénomène de privatisation, les objectifs poursuivis par les gouvernements qui ont privatisé, les caractéristiques des programmes de privatisation et résume l’évidence empirique sur la performance financière et d’opération des entreprises nouvellement privatisées.

Corporate Risk-Taking in Privatized Firms: International Evidence on the Role of State and Foreign Owners

Using a unique database of 190 newly privatized firms from 36 countries, we investigate the impact of shareholders’ identify on corporate risk-taking behavior. We find strong and robust evidence that state (foreign) ownership is negatively (positively) related to corporate risk-taking. Moreover, we find that these relations depend on the level of government extraction. Our results suggest that relinquishment of government control, openness to foreign investment, and improvement of country-level governance institutions are key factors in the success of privatization reform